BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -These two stages of share capital are closely inter-related. Share Application and Allotment A/c is debited while Share Capital A/c is credited for transfer of application money and allotment amount due.

Detailed explanation-2: -On receipt of application money, share application account is credited.

Detailed explanation-3: -This ruling lays down an important principle that share application money constitutes a capital asset under section 2(14) of the ITA.

Detailed explanation-4: -Definition of capital accounts A debit to a capital account means the business doesn’t owe so much to its owners (i.e. reduces the business’s capital), and a credit to a capital account means the business owes more to its owners (i.e. increases the business’s capital).

Detailed explanation-5: -Share Application or share allotment or Share capital A/c all are personal accounts as they represent money from the shareholders and when money is due, these are to be debited because of the rule “Debit the receiver".