Generally Accepted Accounting Principles The Standards issued by the policy-​setting policies are known as the Generally Accepted Accounting Principles (​GAAP). PDF

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CHAPTER 7ACCOUNTING FOR SHARE CAPITALLearning Objectives:At the end of the chapter, the students should be able to: State the rules on accounting for the issuance of shares Differentiate the memorandum entry method from journal entry method of accounting for share capital Prepare entries for the iss...

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CHAPTER 7 ACCOUNTING FOR SHARE CAPITAL Learning Objectives: At the end of the chapter, the students should be able to: 1. State the rules on accounting for the issuance of shares 2. Differentiate the memorandum entry method from journal entry method of accounting for share capital 3. Prepare entries for the issuance of shares at par or stated value, premium and discount 4. Prepare entries for subscription of shares SHARE CAPITAL Share capital or capital stock is the amount fixed in the articles of incorporation, to be subscribed and paid in or secured to be paid in by the stockholders of a corporation, either in money or property, labor or services, at the organization of the corporation or afterwards and upon which it is to conduct its operation. It limits the maximum amount or number of shares that may be issued by the corporation without formal amendment of the articles of incorporation.

METHODS OF ACCOUNTING FOR AUTHORIZED SHARE CAPITAL There are two methods of accounting for authorized share capital namely: 1. Memorandum Entry method There is no journal entry to record the authorized share capital. Only a memorandum entry is made to record the total authorized share capital. However, upon issuance of the share capital, a share capital account is credited. The proforma memorandum entry is: a. One class of shares xxx Company was authorized to issue share capital of P xxx divided into xxx shares with par value of P xxx. or

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