Share application account is referred to as a personal account. The share application account indicates the money received by shareholders in exchange for shares in the company.
Share capital (shareholders’ capital, equity capital, contributed capital,Contributed SurplusContributed surplus is an account in the shareholders’ equity section of the balance sheet that reflects excess amounts collected from the or paid-in capital) is the amount invested by a company’s shareholders for use in the …
Share application money is the amount received by a company from applicants who wish to purchase its shares. It is the money received in respect to an initial public offering of shares. This money can be more or less than the actual amount anticipated in respect to the number of shares floated.
2) Share Forfeiture, Capital Reserve and Securities premium, all are nominal accounts as they represent loss and gain to the business concern.
No, equity share capital is not an asset. But the investor who buys equity shares of the company brings in cash in exchange for the shares given. This increases the assets of the company. Equity shares can also be issued to vendors in the exchange of the supplies or raw material provided by them.
The share allotment account is classified as a personal account. It contains the allotment money of subscribed shares by the shareholders.
In cases like this, until the shares are allotted, the amount received is shown under the Share Application Money Pending Allotment. It comes under the head of the Liabilities in the Balance Sheet, in correspondence to the Cash and equivalents on the Assets side.
Stocks are financial assets, not real assets. Financial assets are paper assets that can be easily converted to cash. Real assets are tangible and therefore have intrinsic value.
Why are we crediting a share application account at the receipt of share application money? – Quora. If u want to ask why its credited to share application account instead of Share Capital it would be better. The reason is Share Capital gets confirmed only on Allotment of shares to the particular person.
Which are the real accounts?
The real accounts are the balance sheet accounts which include the following:
- Asset accounts (cash, accounts receivable, buildings, etc.)
- Liability accounts (notes payable, accounts payable, wages payable, etc.)
- Stockholders’ equity accounts (common stock, retained earnings, etc.)
A liability is any debt the company owes. Equity share is the value of the company’s shares. Since equity share provides capital, and liabilities drain capital, the balance between these two business elements can make or break a small business.
So, can common stock be classed as either an asset or a liability? No, common stock is neither an asset nor a liability. Common stock is an equity.