Company Accounts-1: Jaiib/DBF Paper 2, (Module C), Unit 5

Company Accounts-1: Jaiib/DBF Paper 2, (Module C), Unit 5

Dear bankers,

As we all know that  is Company Accounts-1 for JAIIB Exam. JAIIB exam conducted twice in a year. So, here we are providing the Company Accounts-1 (Unit-5), Final account (Module C), Accounting Finance for Bankers-Paper 2.

♦Company

  • A company is an association of persons who contribute money or money’s worth to a common stock and uses it for a common purpose. It is created by law and effected by law. It is a legal person just as much as much as an individual but with no physical existence.
  • Section 20 of the Companies Act, 2013, defines a company as A company incorporated under this act, or under any previous company law.

Features of a Joint stock Company

  • Incorporated association
  • Artificial person
  • Perpetual succession
  • Common seal
  • Limited liability
  • Separation of management from ownership
  • Transfer ability of shares
  • Separate legal status
  • Large membership
  • Minimum paid up capital: It is Rs 1 lakh Private LTD. Company and 5 lakhs for a Public LTD company.

Types of companies

On the basis of incorporation On the basis of  ownership On the basis of liability
Chartered company Private company Company limited by shares
Statutory company Public company Company Ltd. by guarantee
Registered company Government company Company with unlimited liability
Foreign company Holding company

Partnership Vs Limited Liability Partnership (LLP)

BASIS FOR COMPARISON PARTNERSHIP LIMITED LIABILITY PARTNERSHIP (LLP)
Meaning Partnership refers to an arrangement wherein two or more person agree to carry on a business and share profits & losses mutually. Limited Liability Partnership is a form of business operation which combines the features of a partnership and a body corporate.
Governed By Indian Partnership Act, 1932 Limited Liability Partnership Act, 2008
Registration Optional Mandatory
Charter document Partnership deed LLP Agreement
Liability Unlimited Limited to capital contribution, except in case of fraud.
Contractual capacity It cannot enter into contract in its name. It can sue and be sued in its name.
Legal Status Partners are collectively known as firm, so there is no separate legal entity. It has a separate legal status.
Name of firm Any name Name containing LLP as suffix
Maximum partners 100 partners No limit
Property Cannot be held in the name of firm. Can be held in the name of the LLP.
Perpetual Succession No Yes
Audit of accounts Not mandatory Mandatory, only if turnover and capital contribution overreaches 40 lakhs and 25 lakhs respectively.
Relationship Partners are agents of firm and other partners as well. Partners are agents of LLP only.

♦Classes of Share Capital

Share capital of a company limited by shares can be two kinds

  • Equity share
  • Preference share

Equity share capital means that part of share capital which is not preference share capital. Preference shares can be further classified as under:

  • Cumulative
  • Redeemable
  • Participating

Share capital can be classified in a different way as to:

  • Authorised capital
  • Issued capital
  • Subscribed Capital
  • Called up capital
  • Paid-up capital

♦Issue of Shares

ISSUE OF SHARE AT PAR

  • Bank
  • Share application
Debited
………….
…………..
credited
  • Share application
  • share capital
Debited
…………..
……….
Credited
Over subscription

  • share application
  • share capital
  • bank (refund)
  • share allotment
 

Debited
……….
…………
…………

 

………..
Credited
Credited
Credited

SHARE ALLOTMENT/SHARE CALL

  • Share allotment a/c
  • Share capital a/c
Debited
……………
……….
Credited
  • Bank a/c
  • Share allotment a/c
Debited

………….

…………

Credited

  • Share call a/c
  • Share capital a/c
Debited
…………..
…………
Credited
  • Bank a/c
  • Share call a/c
Debited
…………
………
Credited
  • Calls in arrears a/c
  • Share allotment a/c
  • Share call a/c
Debited

………….

…………….

………….

Credited

Credited

Issue of shares at premium

  • Share application/ allotment a/c
  • Share capital A/c
  • Share premium A/c
Debited
…………….
…………….
…………….
Credited
Credited

Issue of shares at discount

Debited
Debited
……………
…………..
………….
Credited

Forfeiture of shares

  • Share capital A/c
  • Call in arrears A/c
  • Forfeited shares A/c
Debited
………..
………
………
Credited
Credited

Re-issue of shares

  • Bank A/c
  • Forfeited shares A/c
  • Share capital A/c
  • Capital reserve A/c
Debited
Debited
………..
………..
……….
……….
Credited
Credited

Issue of Bonus shares

  • Capital Redemption Reserve A/c
  • Share premium A/c
  • Capital reserve A/c
  • Gen Reserve A/c
  • Profit & Loss A/c
  • Bonus to shareholders A/c
Debited
Debited
Debited
Debited
Debited
………..
………..
………..
……….
……….
………..
credited
·         Bonus to shareholders A/c

·         Equity share capital A/c

Debited

…………

………….
credited

♦Non- Voting Shares

Section 43 of the Companies Act 2013, Provided that share capital of the company shall consist of the following:

  • Equity shares with voting rights
  • Equity shares with differential rights as to dividend, voting or otherwise in accordance with such rules as may be prescribed; and
  • Preference share capital

The demand for non-voting equity shares has been made by several sections of the industry basically on the ground that they do exist in many other countries and also provide a measure to the management to tap a class of investors who are interested in higher dividend against absence of voting rights.

There are some conditions for issue of non-voting equity share follow:

  • Issue of non-voting equity shares shall be authorized by the Articles of Association of the company and approved by the shareholders at their general body meeting by passing a special resolution.
  • Special resolution must state the price at which the shares can be issued and higher rate of dividend which non-voting equity shares shall carry.
  • Such shareholders are entitled to all rights and bonus shares but do not enjoy voting rights.
  • Only 25% of the paid-up capital of the company can be issued as equity shares without voting rights.
  • Only a public company limited by shares can issue non-voting equity shares.
  • Non company will be permitted to convert shares with voting rights into shares without voting rights.

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