Question:
The Balance in the Share Forfeited Account relating to reissue of forfeited shares will be treated as:
The Balance in the Share Forfeited Account relating to reissue of forfeited shares will be treated as:
Updated On: Nov 4, 2024
- Capital Profit
- Revenue Profit
- Capital Loss
- Revenue Reserve
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The Correct Option is A
Solution and Explanation
The balance in the Share Forfeited Account represents the amount collected from share- holders whose shares were forfeited. When the forfeited shares are reissued, this amount is treated as capital profit and transferred to the Capital Reserve Account. This is because the amount received from forfeited shares is considered a gain on capital transactions and not regular business revenue.
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