BBA Study Material Equity Shares Issue Bookkeeping Accounting
BBA Study Material Equity Shares Issue Bookkeeping Accounting : In Ts Article You Can Find Meaning Preference shares Notes . and difference between reserves and provision Means That Its Is Best Topic of Bookkeeping Study For BBA 1st Semester Year . Here You Find Topic Wise,Chapter Wise, Subject Wise Study Material And other Links of Related to the Bookkeeping. How To Learn BBA Bookkeeping Notes Difference Between Reserves and Provision Meaning of Capital Preference Shares other You Here . we find the Equity shares Issue shares sweat equity meaning more If we talk about BBA then Bookkeeping and Accounting is one of the most important Topic. Bookkeeping is common to all semesters Here we are presenting BBA Bookkeeping and Accounting Study Material and Notes for all Semesters. BBA Bachelor of Business Administration in Bookkeeping and Accounting notes study material in this website cyberpoint9.com/testing most important chapter and Question paper BBA notes in this page more links to BBA notes and study material and question paper mock paper. bba in accounting and finance is an undergraduate commerce course. BBA study in bookkeeping and accounting, financial planning, economics, business organisation and other similar areas of operation in any business organisation. full bba course three year degree course consists of Six semesters. the basic eligibility criterion for bba dgree is qualifying 10+2 or equivalent examination in any stream from a recognized board of the country.Bachelor of Business Administration (BBA) in Accounting programs combine the fundamentals of a business program with concentrated coursework in accounting. Find out what these programs entail and what students do after graduation.bba subject bookkeeping and accounting chapter wise notes study material, question paper, mock paper, sample paper, in this website study point to bba notes.
Shares which are not preference shares are equity shares. The balance of profit after appropriating dividend to preference shares may be distributed as dividend to equity shareholders. At the time of winding up, the payment is made to creditors; then preference share capital is returned and thereafter, whatever remains belong to equity shareholders.
Explain issue of debentures at discount
If debentures are issued at discount or redeemable at premium, such discount or premium is a capital loss. This loss should be written off during the life of debentures. Total loss should be allocated over a period during which debentures are alive and appropriate amount should be transferred to profit and loss account each year. Loss on issue of debenture may be written off by adopting one of the following methods :
- Fixed Instalment Method : Under this method, total loss on issue of debentures (discount on issue + premium on redemption) is divided by number of years during which debentures continues and loss is written off in equal Instalment every year. This method is suitable when total debentures are redeemed on a specific date.
- Fluctuating Instalment Method : under this method loss is written off in the ratio of outstanding balance of debentures each year. This method is suitable when debentures are redeemed in instalment over a period. When debentures are redeemed in isntalment, funds raised by debentures are not utilised equally each year. Hence, burden of loss on issue of debentures is also should not fall on the profits each year equally. Therefore, loss on issue of debentures is allocated in the ratio of amount utilised each year.
Debenture (BBA Bookkeeping Notes)
Debenture is the source of obtaining long-term finance for a company. When a company needs funds for a long period. It has various option loan from financial institutions. Fixed deposits from public or issue of debenture company has to pay interest on debenture company has to pay interest on debentures. Although the word ‘debentures’ is used widely, there is no specific statutory defined of debenture. As per section 2(12) of the companies act, 1956 debentures has been defined as “debentures includes debenture stock, bonds and any other securities of company, whether constituting a charge on the assets of the company or not”.
Kinds of Debenture
- Simple or Mortgage Debentures : Simple debenture do not have any security. These debentures are unsecured. But mortgage debentures are secured debentures and have charge on the property of the company.
- Redeemable or Perpetual Debentures : Redeemable debentures are repaid after a certain period. Usually such debentures are redeemable after 5 to 7 years. But amount taken against perpetual debentures are not refunded during the life time of company. Such debenture are paid back only on the liquidation of company.
- Bearer or Registered Debenture : Bearer debenture are transferable by delivery only. The name of barer debenture holders are not recorded in the book of company. Registered debenture are transferable only through company.
A record of registered debenture holders is kept by company. When debenture is sold, it has to sent to company for registered the name of the purpose. Normally only registered debentures are issued by companies.
- Convertible or Non-convertible Debentures : Convertible debentures are converted into share after sometime. After conversion the status of debenture holders is changed to shareholders. Such debenture are very popular. Non-convertible debentures remain as debentures during its full tenure. These are not converted in shares.
Issue of Debentures (BBA Study Material)
The subject of issue of debentures may be studied from the following point of view :
- From Consideration Point of View :
- Issued for cash
- Issued for a consideration other than cash.
- Issued as a collateral security.
- From Price Point of View :
- Issue at par.
- Issue at a premium.
- Issue at a discount.
- From Redemption Point of View :
- Redeemable at par.
- Redeemable at a premium.
- Redeemable at a discount.
Interest on Debentures
Company has to pay interest on debentures at a specified date. Usually interest is payable at six monthly intervals interest is charged against profits and debited to profit and loss account. If date of interest payment and date of closing the accounting year are different, entry for outstanding interest for the period from the preceeding date of closing the book will be made.
Further interest is payable on the nominal value of debentures. If debentures have been issued at premium of discount. Interest is payable on nominal value. However, in the case effective rate of interest will change.
Redemption of Preference Shares
A company limited by shares may issue redeemable preference shares to be redeemed at a fixed date or after a certain period. For redemption of preference shares following conditions as per provisions of section 80 of the companies Act, 1956 (as amended) are to be complied with :
- The articles of association of the company must provide for the issue of redeemable preference shares.
- There shares may be redeemed only out of the profits available for dividend or out of the proceeds of a fresh issue of shares (equity or preference) made for the purpose of redemption.
- These shares must be fully paid before redemption.
- Id shares are redeemable at a premium, it (premium on redemption) must have been provided for out shares or security premium account or out of profits.
- Where shares are redeemable out of the profits available for dividend a sum equal to the nominal amount of the preference shares redeemable shall be transferred out of profits to the capital redemption reserve account. This reserve cannot be used for any purpose except for issuing fully paid bonus shares to company’s members. It means capital redemption reserve is to be or will the treated as paid up capital.
- The redemption of preference shares by a company shall not be taken as reducing the amount of its authorised share capital.
- If new shares are issued for the purpose of redemption of preference shares. It will not be treated as increase of capital but replacement of capital.
- For redemption, no fixed asset should be sold for arranging cash required.
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