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General Accounting Principles Company Final Accounts

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Share Forfeiture Account appears in a Company’s Balance Sheet under the Sub-head ……………….

Share Capital

Reserve & Surplus

Contingent Liability

Commitments

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Explanation:

When a shareholder defaults in paying allotment money or call money the company has the power to forfeit the shares. Now whatever amount is received by the company on forfeiting the shares is an capital receipt for the company and hence it is shown as a part of the share capital. And also as per the format prescribed by Schedule III to the Companies Act 2013, share forfeiture balance has to be shown under share capital.