If the balance in a forfeited shares account is refundable to the owners of those shares, then the forfeited shares account is classified in the financial statements as:
A) income.
B) equity.
C) expenses.
D) liabilities

Question

Quizplus · Accepted Answer

When the balance in a forfeited shares account is refundable to the owners of those shares, it represents an obligation of the company to pay the shareholders in the future. Therefore, it is classified as a liability in the financial statements.

If the Balance in a Forfeited Shares Account Is Refundable