Question

Balance of Share Forfeiture A/c is shown in the Balance Sheet under the item:

• A. Share Capital A/c
• B. Current Liabilities and Provision
• C. Unsecured Loan
• D. Reserve and Surplus

Hint:

Share Forfeiture balance = Capital Profit → shown under Reserves and Surplus in Balance Sheet.

Answer 1

The Correct Option is D

Step 1: Meaning of Share Forfeiture.
When a shareholder fails to pay allotment or call money, their shares may be forfeited. The amount already received from such shareholders is transferred to the “Share Forfeiture A/c”.
Step 2: Nature of balance.
The balance in this account represents capital profit, because it arises from forfeiture of shares and not from regular trading activities.
Step 3: Presentation in Balance Sheet.
Since it is treated as capital profit, it is shown under the head “Reserves and Surplus” in the Balance Sheet until reissue of shares.
Step 4: Conclude.
Thus, the balance of Share Forfeiture A/c is shown under Reserves and Surplus.
Final Answer: \[ \boxed{\text{Reserve and Surplus}} \]