[amp_mcq option1=”Reserve and surplus” option2=”By adding it in the paid up capital” option3=”Under current liabilities and provision” option4=”None of the above” correct=”option3″]
The correct answer is: C. Under current liabilities and provision.
Share forfeiture account is a liability account that is used to record the amount of money that has been forfeited by shareholders who have failed to pay the full amount of their subscription. This amount is shown as a current liability on the balance sheet, as it is expected to be paid in the near future.
The other options are incorrect because:
- Option A is incorrect because reserve and surplus are equity accounts.
- Option B is incorrect because paid up capital is the amount of money that has been paid in by shareholders for their shares.
- Option D is incorrect because the share forfeiture account is a liability account, not an asset account.