Question

Match the following: 

List - I		List - II
A.	Share Forfeiture Account	I.	Capital Profit
B.	Securities Premium	II.	Capital Reserve
C.	Reissue of Forfeited Shares	III.	Share Capital

• A. A-I, B-II, C-III
• B. A-II, B-III, C-I
• C. A-III, B-II, C-I
• D. A-I, B-III, C-II

Hint:

While the gain on forfeiture is a capital profit, the ultimate balance left in the Share Forfeiture account after reissue is transferred to "Capital Reserve".

Answer 1

The Correct Option is A

Step 1: Understanding the Question:
We need to match the accounting terms related to shares with their nature or financial statement classification.

Step 2: Detailed Explanation:
1. Share Forfeiture Account (A): When shares are forfeited, the profit made by the company (amount received but not returned) is a Capital Profit (I).
2. Securities Premium (B): This is a surplus received over and above the face value. It is classified under Reserves and Surplus and behaves as a Capital Reserve (II) in terms of its restricted usage.
3. Reissue of Forfeited Shares (C): When shares are reissued, they are added back to the Share Capital (III) of the company.

Step 3: Final Answer:
The correct matching is A-I, B-II, C-III.