Why is share capital not under assets?

Hi Sir,

As u said about Assets, why not in the example "share capital" came under assets or u can say current asset,why it was shown other than this? Share capital is cash which company has in their account so it should come under current assets. Just can you clarify?

1 Answer(s)


Ashish, When cash comes into the company through share issue that cash is added to the Cash balance in the current asset. But due to the system of double entry book keeping, when you increase current assets you have to proportionally balance another account so that the balance sheet balances. That is done by increasing the share capital as well apart from increasing the cash balance.