Question
Accountancy Question on Shares
The Balance in the Share Forfeited Account relating to reissue of forfeited shares will be treated as:
A
Capital Profit
B
Revenue Profit
C
Capital Loss
D
Revenue Reserve
Answer
Capital Profit
Explanation
Solution
The balance in the Share Forfeited Account represents the amount collected from share- holders whose shares were forfeited. When the forfeited shares are reissued, this amount is treated as capital profit and transferred to the Capital Reserve Account. This is because the amount received from forfeited shares is considered a gain on capital transactions and not regular business revenue.