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why share capital shown in liability side of a balance sheet
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Answer Posted / taimoor akhlaqq
SHARE CAPITAL IS NOT A LIABILITY OF THE COMPANY, AS AN
ACCOUNTING RULE IT IS SHOWN ON THE CREDIT SIDE AND HAVING A
CREDIT BALANCE BUT SHOWING ON CREDIT SIDE DOES NOT MEAN
THAT IT IS LIABILTY, LIBILITIES ARE SEPERATELY SHOWN UNDER
THE LIABILITY HEADINGS BUT SHARE CAPITAL IS NOT SHOWN UNDER
THE HEADING OF LIABILITY. IT IS SHOWN ON THE CREDIT SIDE OF
THE BALANCE SHEET. LIABILITY MEAN OBLIGATION, BUT THE
COMPANIES ARE NOT LIABILE TO PAY IF THE ASSETS ARE NOT
REALIZED THE AMOUNT AS SHOWN IN THE BALANCE SHEET AT THE
TIME OF LIQUIDATION.
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