Question

Forfeiture of shares results in reduction of:

• A. Paid-up Capital
• B. Authorised Capital
• C. Fixed Assets
• D. Reserved Capital

Hint:

Forfeiture affects paid-up capital, not authorised capital.

Answer 1

The Correct Option is A

Step 1: Meaning of forfeiture.
If a shareholder fails to pay call money, his shares may be forfeited.
Step 2: Effect.
Forfeited shares reduce the company’s paid-up capital, because the shareholder’s contribution is cancelled.
Step 3: Conclude.
Authorised capital remains unchanged, only paid-up capital decreases.
Final Answer: \[ \boxed{\text{Paid-up Capital}} \]