The Balance in the Share Forfeited Account relating to reissue of forfeited shares will be treated as:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Capital Profit
The balance left in the Share Forfeited Account on reissued shares arises from a capital transaction, the forfeiture and reissue of shares, not from trading. So it is a capital profit and is transferred to Capital Reserve.
Why the other options are incorrect
Option (2) Revenue Profit — Incorrect. It does not arise from the normal operations of the business.
Option (3) Capital Loss — Incorrect. The balance is a credit balance, so it is a gain, not a loss.
Option (4) Revenue Reserve — Incorrect. Revenue reserves come out of trading profits; this balance goes to Capital Reserve.
NCERT (2026-27 edition):
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