Issuance of Shares Subscription in Accounting
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Questions and Answers

What occurs during Full Subscription of shares?

  • Number of shares offered to the public is more than the number of shares for which it gets an application
  • The company rejects the excess amount of applicants
  • Number of shares offered and applications received are the same, and shares are distributed to all applicants (correct)
  • Number of shares offered is less than the number of shares for which the application is received

    • What is referred to as Under Subscription?

  • Number of shares offered is less than the number of shares for which the application is received (correct)
  • Number of shares offered to the public is more than the number of shares for which it gets an application
  • Number of shares offered and applications received are the same, and shares are distributed to all applicants
  • The company rejects the excess amount of applicants

    • What happens during Over-Subscription of shares?

  • Number of shares offered to the public is more than the number of shares for which it gets an application (correct)
  • Number of shares offered and applications received are the same, and shares are distributed to all applicants
  • Number of shares offered is less than the number of shares for which the application is received
  • The company rejects the excess amount of applicants

    • What does 'Shares at Par' mean?

    <p>Shares are reported to have been issued at par value when subscribers need to pay only the nominal or face value of the shares issued</p> Signup and view all the answers

    What is the purpose of par value in shares?

    <p>To determine a shareholder’s maximum liability and protect a company’s creditors</p> Signup and view all the answers

    When are shares said to be issued against a lump sum?

    <p>If shares are issued at par and receivable in a single payment</p> Signup and view all the answers

    What is the system called when issued shares can be paid in various installments?

    <p>Shares issued on an installment basis</p> Signup and view all the answers

    When a company issues shares at a lower cost than the nominal value, it is known as:

    <p>Issuance of Shares at Discount</p> Signup and view all the answers

    In the context of share issuance, what does 'premium' refer to?

    <p>Amount received greater than the face value of shares</p> Signup and view all the answers

    What is the term for the total price payable for a specified number of shares at the time of application?

    <p>Application price</p> Signup and view all the answers

    When issuing shares at a discount, what does the difference between the issue price and the nominal value represent?

    <p>Discount granted by the firm</p> Signup and view all the answers

    What is the name for the total amount payable on shares along with the application when issued at a discount?

    <p>Discounted share value</p> Signup and view all the answers

    In the context of share issuance, what is meant by 'allotment'?

    <p>Allocation of shares to applicants</p> Signup and view all the answers

    What do you call the process where shareholders make payments in multiple stages such as application, allotment, and calls?

    <p>Staged payment system</p> Signup and view all the answers

    Study Notes

    Share Issuance

    • During Full Subscription, the number of shares issued is equal to the number of shares applied for.
    • Under Subscription occurs when the number of shares applied for is less than the number of shares issued.
    • Over-Subscription occurs when the number of shares applied for is more than the number of shares issued.

    Share Pricing

    • Shares at Par means that the shares are issued at their nominal value or face value.
    • The purpose of par value is to provide a minimum value for the shares.

    Share Payment

    • Shares are said to be issued against a lump sum when the full payment is made at the time of application.
    • The system where shares can be paid for in various installments is called Calls.

    Discounted and Premium Shares

    • When a company issues shares at a lower cost than the nominal value, it is known as issuing shares at a discount.
    • In the context of share issuance, premium refers to the excess amount paid over the nominal value.
    • The difference between the issue price and the nominal value represents the discount when shares are issued at a discount.

    Share Allotment and Payment

    • The total price payable for a specified number of shares at the time of application is called the Application Money.
    • The total amount payable on shares along with the application when issued at a discount is called Discount Premium.
    • Allotment refers to the process of allocating shares to applicants.
    • The process where shareholders make payments in multiple stages, such as application, allotment, and calls, is called Instalment System.

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    Description

    Test your knowledge of accounting for the issuance of shares subscription with this quiz. Learn about different scenarios such as full subscription and under subscription and how they are handled in accounting.

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