Issuance of Shares & Debentures

Flashcards covering key concepts related to the issuance of shares and debentures in a joint stock company, including types of shares, share capital, issuance methods (at par, premium, discount), public subscription, under-subscription, and debentures/bonds payable.

What are the three main types of business organizations mentioned?

Sole Proprietorship, Partnership, and Joint Stock Company

What are 'Promoters' in the context of a Joint Stock Company?

The people who establish/create the company.

What is 'Par Value' or 'Face Value' of a share, according to the notes?

Rs 10

What are the two main types of shares?

Ordinary Shares (Common Stock) and Preference Shares (Preferred Stock)

Who are ordinary shares generally issued to?

The general public (عام لوگوں کو)

Who are preference shares typically issued to?

Insiders or specific/preferred people (اندر کے لوگوں / خاص لوگوں کو)

What is a 'Dividend'?

The profit received on a share after purchasing it (Sharei خریدنے کے بعد اس پر جو probit ملتا ہے)

What is the par value usually associated with ordinary shares?

Rs 10

Which type of shareholders receive profit first?

Preference Shareholders

Which type of shareholders typically have voting rights in company meetings?

Ordinary Shareholders (Equity Shares)

After assets are sold, who gets their share first?

Shareholders

What is 'Share Capital'?

The amount a company obtains by selling its shares (کمپنی اپنے Shares بیچ کر جو رقم حاصل کرتی ہے)

What are the three ways shares can be issued?

At Par Value (10), At Premium (12), At Discount (07)

What is 'Public Subscription'?

The process of the public applying to purchase shares of a company.

What are the three types of public subscription conditions?

Fully Subscription, Over Subscription, and Under Subscription

What happens in 'Fully Subscription'?

The number of applications received equals the number of shares offered.

What happens in 'Over Subscription'?

The number of applications received is more than the number of shares offered.

What happens in 'Under Subscription'?

The number of applications received is less than the number of shares offered.

What is 'Underwriting Commission'?

When a company's shares are not fully sold, the bank buys the remaining shares; the commission paid to the bank for this service.

What is the journal entry for recording share application received at par?

Debit Bank, Credit Ordinary Shares Application

What is the journal entry for the issue of shares at par?

Debit Ordinary Shares Application, Credit Ordinary Shares Capital

What is the journal entry for recording share application received at premium?

Debit Bank, Credit Ordinary Shares Applications

What is the journal entry for the issue of shares at premium?

Debit Ordinary Shares Application, Credit Ordinary Share Premium, Credit Ordinary Shares Capital

What is the journal entry for recording share applications received at discount?

Debit Bank, Credit Ordinary Share Applications

What is the journal entry for the issue of shares at discount?

Debit Ordinary Share Applications, Debit Ordinary Share Discount, Credit Ordinary Share Capital

What is the journal entry for refund of excess money to the public in case of over subscription at par?

Debit Ordinary Share Application, Credit Bank

What is the journal entry to record remaining share sold to underwriter?

Debit Bank, Credit Ordinary Share Capital

What is the journal entry to record the paid commission to under writer?

Debit Commission Expense, Credit Bank

What is the formula to calculate the number of shares issued in direct issue of shares?

Cost of Asset = No of shares x Market Price of each Share

What is the maximum duration of debentures

5 years

Define Debentures Redomption

Repayment of Debentures

What is the par value of Debenture

Rs 100

How shares are differentiated from debentures?

Share is a part of Shareholder Equity /owner Equity and Debenture is a part of long term Liability.

How dividend and interest payments are differentiated?

Dividend is paid to shareholders and Interest is Paid to debenture holders

What are conditions of issue and redemption?

Issue at Par, Issue at Premium and Issue at Discount. Redemption at Par and Redemption at Premium

Where debenture payable is recorded in balance sheet?

long term liability

Is discount on debenture a capital Loss?

Yes

Does company issued denture certificate to take loan?

Yes

In which account commission Expense is accounted for?

Loss

What does Preliminary Exp include?

Expenses made by Promoters