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mediumMCQCUET 2025 31 May Shift 12026CUET Accountancy
1 mark

When journal entry for forfeiture of shares is recorded in the Company's books, the Share Capital Account -

  1. A
    Will be debited by the issue price of the shares forfeited.
  2. B
    Will be debited by the face value of the shares forfeited.
  3. C
    Will be debited by the called up value of the shares forfeited.
  4. D
    Will be credited by the issue price of the shares forfeited.

Solution & Step-by-step Explanation

When shares are canceled/forfeited due to default on payment, the share capital previously created up to the point of call must be reversed. Hence, the Share Capital Account is debited by the called-up value of the specific shares being forfeited.

Practice this question

Try it yourself before checking the explanation above.

When journal entry for forfeiture of shares is recorded in the Company's books, the Share Capital Account -
A
Will be debited by the issue price of the shares forfeited.
B
Will be debited by the face value of the shares forfeited.
C
Will be debited by the called up value of the shares forfeited.
D
Will be credited by the issue price of the shares forfeited.

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Company AccountsShare CapitalForfeiture Entry

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