Share capital
Share capital is the amount recognised in equity for shares issued by a company, commonly their nominal or par value in basic FA questions. Amounts received above nominal value are normally recorded separately as share premium. Distinguish share capital from the wider total equity, which can also include retained earnings and other reserves, and from a share’s changing market price.
Worked example
A company issues 20,000 ordinary shares of $1 nominal value for $1.50 each. It receives $30,000 cash: credit share capital $20,000 and share premium $10,000. The issue does not create revenue or profit.
Common mistake
An instrument called a share may instead be a liability if its contractual obligations require that classification. Use the terms of preference shares supplied in the question.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | K1 | Direct | July 2027–August 2028 |
| CIMA | BA3 | Direct | Official assessment-window verification pending |
| FIA | FFA | Direct | September 2026–June 2027 |