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Allotment of Shares

When shares a...

Question

When shares are forfeited, share capital account will be debited by:

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A

Face value of shares

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B

Market value of shares

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C

Paid-up value of shares

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D

Called-up value of shares

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Solution

The correct option is D Called-up value of shares
Share capital account represents the liability of the company because it is an amount borrowed from the public. Therefore, at the time of forfeiture of shares, it is debited with a called-up amount.

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