1. Company Fundamentals and Share Capital Structure

A company is a legal entity separate from its owners, offering limited liability. Its ownership is divided into transferable units called shares. The share capital structure refers to the composition of capital raised through shares, including authorized, issued, subscribed, called-up, and paid-up capital. Understanding company fundamentals is key to accounting for corporate entities.

2. Issue of Shares and Accounting Treatment

Companies raise capital by issuing shares to the public. The issue of shares can be at par, at a premium, or at a discount. Proper accounting treatment involves recording applications, allotment, calls made on shares, and receipt of funds. Entries are made in journals and posted to relevant ledger accounts like Share Capital, Share Application, etc.

3. Forfeiture and Reissue of Shares

When a shareholder fails to pay the amount due on shares (calls unpaid), the company can forfeit those shares. Forfeited shares are those the company cancels due to non-payment. Subsequently, these shares can be reissued to other members, often at a discount. The accounting entries for forfeiture and reissue must correctly reflect the changes in share capital and retained earnings.

4. Debenture Fundamentals and Types

Debentures are long-term debt instruments used by companies to raise funds. They represent a loan from debenture holders to the company, with terms for interest payment and repayment specified. Fundamentals include understanding debenture holders as creditors. Debentures can be classified based on issuance (e.g., at par, premium, discount), security (secured, unsecured), or convertibility (convertible, non-convertible).

5. Issue of Debentures

Companies undertake the issue of debentures to finance long-term projects or working capital needs. Debentures can be issued at par, at a premium, or at a discount. The accounting treatment for their issue involves recording cash received, issue expenses, and any premium or discount on issue, which affects the profit and loss account or is amortized over the debenture's life.

6. Debenture Accounting

Debenture accounting covers the entire lifecycle of debentures, from issuance to redemption. This includes recording the issue, interest payments, and redemption of debentures. Companies must also account for any discount or premium on issue and redemption, often creating a 'Debenture Redemption Reserve' as mandated by law to ensure timely repayment.