Company: Concept, Legal Documents and Formation
कम्पनी: अवधारणा, कानूनी कागजात र स्थापना
Meaning and characteristics of a Joint Stock Company, types of companies (Private, Public, Listed), Memorandum of Association (MOA), Articles of Association (AOA), and Prospectus.
A complete handbook on corporate financing, types of shares, journal entries for issue of shares at par, premium, and discount, calls in arrears/advance, pro-rata allotment schedules, and accounting for forfeiture and re-issue under the Nepal Company Act 2063.
Textbook Exercises & Solutions
Showing 5 of 5 Solved QuestionsHigh-Yield Exam Focus Questions (3)
High-probability exam questions curated specifically for Company: Concept, Legal Documents and Formation.
Exam Rationale: Accounting for Share Capital is assigned 10 marks in the NEB Class 12 specification grid, invariably featuring Pro-rata Allotment or Forfeiture/Re-issue.
Exam Rationale: In the NEB Class 12 Principles of Accounting examination, a comprehensive 8-mark numerical involving 3:2 Pro-rata allotment, forfeiture of shares before first call, and partial re-issue is the benchmark examination question.
Exam Rationale: Examines the crucial distinction between forfeiture when securities premium is received vs when it remains unpaid, together with complete presentation on the Statement of Financial Position.
Quick Revision Takeaways
Common Exam Pitfalls to Avoid
⚠️ Common Error: Calculating allotment arrears of a pro-rata allottee simply as Allotted Shares * Allotment Rate.
✓ Correct Approach: Deduct the excess application money paid by the applicant on their extra applied shares.
Why: The applicant paid application fees on more shares than were allotted; that surplus was already credited toward their allotment.
⚠️ Common Error: Debiting Securities Premium Account on forfeiture even when the premium was already collected.
✓ Correct Approach: Leave Securities Premium untouched if it was already collected; only debit it if the shareholder defaulted on paying the premium.
Why: Under the Company Act, securities premium once collected becomes statutory capital reserve and cannot be cancelled.
⚠️ Common Error: Transferring the entire Share Forfeiture balance to Capital Reserve when only partial shares were reissued.
✓ Correct Approach: Calculate the proportional forfeiture gain only for the specific number of shares re-issued.
Why: The un-reissued forfeited shares still carry a liability to be re-issued in the future.
Curriculum Development Centre, Ministry of Education, Nepal
Company Accounts Unit: 10 marks compulsory weightage.
Nepal Law Commission
Statutory framework governing share capital, securities premium, and discount prohibitions.