Which of the following given statements are true?(A) Share Capital is…

Which of the following given statements are true?

(A) Share Capital is not shown under Equity & Liabilities in the Balance Sheet.

(B) Forfeited shares cannot be re-issued at a discount.

(D) Capital reserve account has a credit balance.

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → (C) and (D) only

Each statement turns on where an item sits in the company’s balance sheet or on the rules for reissue and premium.

(A) Share Capital is not shown under Equity & Liabilities in the Balance Sheet. Incorrect. Share capital is the first item under Equity and Liabilities, within Shareholders’ Funds; the securities premium and reserves sit under the same title.

(B) Forfeited shares cannot be re-issued at a discount. Incorrect. They can be reissued at par, at a premium or at a discount; the only limit is that the discount cannot exceed the amount forfeited on them.

(C) Securities Premium Reserve can be used for issuing bonus shares. Correct. Issuing fully paid bonus shares is one of the permitted uses of the premium.

(D) Capital reserve account has a credit balance. Correct. It is built from capital profits, such as the gain left on reissue of forfeited shares, so it always shows a credit balance.

NCERT (2026-27 edition):
Forfeiture of Shares – “… The balance of shares forfeited account is shown as an addition to the total paid-up capital of the company under the head ‘Share Capital’ under title ‘Equity and Liabilities’ of the Balance Sheet till the forfeited shares are reissued.”

NCERT (2026-27 edition):
Issue of Shares at a Premium – “… The premium amount is credited to a separate account called ‘Securities Premium Account’ and is shown under the title ‘Equity and Liabilities’ of the company’s balance sheet under the head ‘Reserves and Surpluses’. It can be used only for the following five purposes: to issue fully paid bonus shares to the extent not exceeding unissued share capital of the company; to write-off preliminary expenses of the company; to write-off the expenses of, or commission paid, or discount allowed on any securities of the company; and to pay premium on the redemption of preference shares or debentures of the company.”

NCERT (2026-27 edition):
Reissue of Forfeited Shares – “The directors can either cancel or re-issue the forefeited shares. In most cases, they reissue such shares which may be at par, at premium or at a discount. Forfeited shares may be reissued as fully paid at a par, premium, discount. In this context, it may be noted that the amount of discount allowed cannot exceed the amount that had been received on forfeited shares at the time of initial issue, and that the discount allowed on reissue of forfeited shares should be debited to the ‘Forfeited Share Account’. The balance, if any, left in the Share-Forfeited Account relating to reissued Shares, should be treated as capital profit and transferred to Capital Reserve Account.”