Home For AAT student members AQ 2016 Foundation Certificate in accounting General discussion - Foundation level

A really stupid question

This is as per the title.

Can a company spend its share capital?

I understand that the share capital transaction can not be a straight Dr Share cap. Cr Bank.

Together with share capital can not be distributed via a dividend.

But if a company has £100 share capital in the bank, and the account goes overdrawn the company has spent the cash.

The answer is most likely a yes of course, it's an investment in the company so the company can do as it sees fit

Thank you
TaxManager

Comments

  • wills135wills135 Registered Posts: 30
    Anybody?
  • wills135wills135 Registered Posts: 30
    Lovely thank you.

    I'm not sure why but I thought that maybe the share capital was sort of ring fenced and it written somewhere that the initial £100 could never be spent.

    But then if a company ever goes overdrawn then clearly the amount has been spent.

    You've helped greatly.

    Thank you
  • wills135wills135 Registered Posts: 30
    I pay Kaplan for my distance learning course and I ask questions of them yet I'm told that they will only answer questions based around the study text.

    That's all good and well, I suppose, but without the privilege of being in a classroom, and having a tutor to bounce questions off it does leave many questions unanswered.

    I appreciate people like yourself Mick who offer your knowledge on forums such as this.

    Mickdundee
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