What are the different sources of finance for a company?

Various sources include loans, shares, debentures, and deposits.

What distinguishes equity shares from preference shares?

Equity shares offer voting rights and profits after preference shares.

Companies consider cost, risk, and capital structure for decision-making.

It records the amount received above the face value of shares.

To obtain funds for business operations and strategic initiatives.

Companies can raise money through various means, including debentures, equity shares, preference shares, and public deposits, each offering distinct financial structures and benefits.
The Securities Premium Account plays a crucial role in accounting for profits earned above the face value of shares, reflecting capital gains and enabling companies to utilize these funds for diverse purposes like asset acquisition or debt repayment.

What are the different sources of finance for a company?
Various sources include loans, shares, debentures, and deposits.
What distinguishes equity shares from preference shares?
Equity shares offer voting rights and profits after preference shares.
How do companies decide between issuing shares or debentures for fundraising?
Companies consider cost, risk, and capital structure for decision-making.
What is the purpose of the Securities Premium Account?
It records the amount received above the face value of shares.
What are the primary reasons for companies to issue shares?
To obtain funds for business operations and strategic initiatives.

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The text discusses the formation of a company for business purposes, emphasizing the need for money to promote the business.
Sources of finance for a company include raising money through loans, issuing instruments to investors, and various types of shares like equity shares and preference shares.
Companies can raise money through debentures, commercial paper, certificate of deposits, and public deposits.
Equity shares provide voting rights to shareholders and allow them to receive profits after preference shareholders.
Preference shares have preferential rights in receiving dividends and repayment during winding up of the company.
The Indian Company Act specifies a maximum maturity for preferential issues, ensuring repayment to preference shareholders.
Equity shares have voting rights and receive profits after preference shareholders, reflecting higher risk and expected returns.
The company's lion capital is divided into shares, with equity shareholders being considered equity lion holders.
Share capital includes authorized, subscribed, called-up, paid-up, and debt capital, each representing different stages of capital utilization.
Debentures are written instruments representing loans from investors to the company, with interest payments and repayment terms similar to loans.

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Interest is given to the company every year, not dependent on profit, but on the rate.
Debentures are considered full loans in exams, with interest needing to be paid.
Shares and debentures differ in that shares represent capital raised by issuing instruments, while debentures are loans that require interest payments.
Equity, preference, and venture are types of shares, while debentures are solely loans.
Debentures are a 100% loan instrument, promising interest payments and return of money after a specified period.
Companies decide whether to raise money through shares or debentures based on cost, risk, and overall capital.
Debenture holders receive interest regardless of profit, while shareholders receive dividends only when profit is earned.
Accounting for debentures involves understanding their nature, accounting treatment, and redemption process.
Debentures are long-term sources of finance, distinct from short-term loans, with fixed interest rates and repayment periods.
Companies issue shares for various reasons, such as raising funds, purchasing assets, repaying existing liabilities, rewarding employees, and implementing Employee Stock Option Plans.

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Employees can become owners of the company, receiving a stake in profits and earnings.
Motivating employees can be achieved through various means, including issuing shares.
Cash consideration on share issues is a fundamental accounting concept.
Companies require funds to conduct business, which can be obtained through share issuance.
Preferential issue involves offering shares to a select group of individuals.
Companies can issue shares to the public by getting listed on the stock exchange.
Different methods exist for companies to raise funds, such as issuing shares and adding assets.
The primary reason for issuing shares is to obtain funds for business operations.
Issue price refers to the value at which shares are offered to investors.
Securities premium account is created to record the amount received above the face value of shares.

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The value of a lion's heart is ₹100, but someone is asking for ₹2000, making it unaffordable.
To make the lion more accessible, its value is reduced to ₹10 by the company, offering to buy it for ₹2000 in 1990.
The excess amount over the face value of ₹1990 is considered securities premium, credited to the Securities Premium Account.
This profit is distinct from revenue profit, representing the capital profit earned by the company.
The Securities Premium Account reflects this profit in the balance sheet under Reserves and Surplus.
When a company issues securities, the price often exceeds the face value, creating a premium.
The premium amount is credited to the Securities Premium Account, separate from Share Capital.
The profit from the Securities Premium Account can be used for various purposes, such as buying assets or paying liabilities.
Accounting standards dictate the treatment of certain expenses like preliminary expenses and premiums on redemption, influencing the use of the Securities Premium Account.