CBSE Class 12 Accountancy Chapter 6: Accounting for Share Capital NCERT Solutions

Reviewed by NCERT Help Editorial Team · Updated on 29 Jul 2026

NCERT Solutions PDF Class 12 PDF

CBSE Class 12 Accountancy, Chapter 6, 'Accounting for Share Capital', offers comprehensive NCERT Solutions. This chapter delves into the core aspects of share capital, including differentiating between public and private companies, understanding the procedures and rationale behind share forfeiture, and defining 'Calls in Arrears'. The solutions are crafted to provide students with a clear grasp of these essential accounting principles. Through detailed, step-by-step explanations and accurate definitions, learners can effectively navigate the complexities of accounting for share capital. This resource is crucial for students aiming to excel in their board examinations, enabling them to solidify their understanding of share capital transactions and their corresponding accounting treatments.

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Quick info

Board	CBSE
Class	Class 12
Subject	Accountancy
Session	2026
Language	English
Type	NCERT Solutions
Chapter	Chapter 6

Chapter summary

Chapter 6 of the Class 12 Accountancy syllabus deals with 'Accounting for Share Capital'. This NCERT Solutions set clarifies essential concepts like the characteristics differentiating public and private companies, the circumstances leading to the forfeiture of shares, and the definition of 'Calls in Arrears'. The solutions aim to provide clear, concise explanations for these topics, ensuring students grasp the core principles of accounting for equity instruments.

Learning outcomes

Understand the definition and characteristics of a public company.
Define and differentiate a private company from a public company.
Explain the circumstances under which shares can be forfeited.
Define and explain the concept of 'Calls in Arrears'.

Topics covered

Paper topics

Public Company
Private Company
Share Capital
Forfeiture of Shares
Calls in Arrears
Company Law Basics

Important topics

Distinction between Public and Private Companies
Conditions for Share Forfeiture
Meaning and Accounting of Calls in Arrears

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Questions and Solutions

Question 1

What is a public company?

Solution: A public company is a type of company that is distinct from a private company and has the ability to offer its shares to the general public. Unlike private companies, there are generally no restrictions on the transfer of shares. The market value of a public company is often determined by the daily trading of its shares on stock exchanges. Public companies are required to use the word "Limited" at the end of their registered name.

Question 2

What is a private company?

Solution: A private company is a business entity that is not owned by non-governmental organizations or by a relatively smaller number of shareholders or members. These companies do not sell or purchase their shares to the general public on the stock market. Instead, the company's shares are owned, offered, exchanged, and traded privately among its members. The total number of members in a private company is restricted, typically to a maximum of 200. It is mandatory for a private company to incorporate the words "Private Limited" at the end of its name.

Question 3

When can shares be forfeited?

Solution: Shares can be forfeited when the shareholders of a company fail to pay the amount of call money when it is demanded by the company. The forfeiture of shares results in the cancellation of the membership of the concerned shareholder in the company, and the company may then reissue these shares.

Question 4

What is meant by Calls in Arrears?

Solution: Calls in Arrears occur when shareholders fail to pay the amount due on allotment and/or calls made by the company. When a company issues shares, it may decide to receive the full price upfront or in installments (allotment and calls). If a shareholder fails to pay the amount due on these installments by the specified due date, the unpaid amount is termed as 'Calls in Arrears'.

Common mistakes

Confusing the definitions and restrictions of public vs. private companies.
Not clearly understanding the conditions that trigger share forfeiture.
Misinterpreting 'Calls in Arrears' as a general debt rather than unpaid call money.

Revision tips

Clearly list the distinguishing features of public and private companies.
Memorize the exact conditions for share forfeiture.
Practice identifying scenarios that lead to 'Calls in Arrears'.

Practice MCQs

Q1. Which type of company can issue shares to the general public?

Q2. What is the maximum number of members typically restricted to in a private company?

Q3. Share forfeiture occurs primarily due to:

Q4. What does 'Calls in Arrears' represent?

Q5. Which word must be included at the end of a private company's name?

Frequently asked questions

What is the main difference between a public company and a private company according to these solutions?

A public company can issue shares to the general public and has no restrictions on share transfer, while a private company restricts share transferability and has a limit on the number of members (typically 200).

Under what circumstances are shares forfeited?

Shares are forfeited when a shareholder fails to pay the amount due on calls made by the company for the share capital.

What does 'Calls in Arrears' mean in the context of share capital?

Calls in Arrears refers to the amount of money that shareholders have not paid when it becomes due on allotment and subsequent calls made by the company.

How do these NCERT Solutions help Class 12 Accountancy students?

These solutions provide clear, rewritten explanations for key concepts in Chapter 6, aiding students in understanding share capital accounting and preparing for exams.

Are the questions in this chapter about accounting entries for share forfeiture?

While the solutions define share forfeiture and calls in arrears, the provided questions are definitional. Deeper accounting entries would typically follow in subsequent sections or exercises.

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