Under which sub-head in the balance sheet does the balance of share forfeiture account appear?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Share capital
When shares are forfeited, the amount already received from the shareholder (the forfeited amount) is transferred to the Share Forfeiture Account. This amount is capital in nature and is shown in the Balance Sheet as an addition to the amount of Subscribed Capital under the main head Share Capital until the forfeited shares are reissued.