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FEATURES OF FORMATION AND ACCOUNTING OF AUTHORIZED CAPITAL
Kanaatov Anvar Shokirovich
Tutor at Samarkand Institute of Economics and Service
Eshbayeva Sarvinoz Alisherovna
Student at Samarkand Institute of Economics and Service
sarvinozalisherovna450@gmail.com
Bahodirova Madinabonu Ixtiyor qizi
Student at Samarkand Institute of Economics and Service
bahodirovamadinabonu4@gmail.com
Urinboyev Bexruz Zoir ugli
Student at Samarkand Institute of Economics and Service
Annotation:
This article explores the economic and legal essence of authorized capital, its
formation sources and methods, and the accounting procedures involved. Special attention is
given to the requirements of the legislation of the Republic of Uzbekistan regarding authorized
capital and the practical challenges faced during its formation.
Keywords:
authorized capital, charter fund, founders’ contribution, shares, accounting, equity,
organizational form.
Authorized capital is the financial basis of any business entity. It is necessary for the enterprise
to start its work, fulfill its debt obligations and ensure its responsibility to investors. The
formation and proper accounting of authorized capital are important for the efficiency, financial
stability and reliability of the enterprise.
Authorized capital is a set of property, funds or other assets provided by the founders
(individuals or legal entities) when a legal entity is established, which is determined by the
organization's charter. The size of the authorized capital indicates the reliability of the enterprise
in relation to external investors and lenders.
Authorized capital serves as:
• the main financial source for starting an enterprise;
• a means of determining property relations between the founders;
• a criterion that determines the limit of liability for the obligations of the enterprise;
• an element indicating the financial strength of the organization in the reports.
Authorized capital is formed from the following sources:
• Cash (in national or foreign currency);
• Property (buildings, machinery, vehicles, equipment);
• Intangible assets (patents, licenses, intellectual property rights);
• Securities (shares, bonds, etc.).
Depending on the form of organization, the approach to authorized capital differs:
• In a limited liability company (LLC) - the share of the founders is clearly indicated and they are
liable in the amount of their contribution.
• In joint-stock companies - the authorized capital is represented by shares and is managed
through the market mechanism.
• In state-owned enterprises - the authorized capital is formed at the expense of state property.
Authorized capital is reflected in accounting as follows:
a) Initial formation:
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Debit: 46xx – Debtors (founders' contributions)
Credit: 85xx – Authorized capital
b) When adding funds:
Debit: 51xx – Bank account number
Credit: 46xx – Accounts receivable
c) When adding equipment:
Debit: 10xx – Fixed assets
Credit: 46xx – Accounts receivable
In cases of changes in the authorized capital (increase or decrease), the corresponding accounting
entries are also made.
An increase can be as follows:
• by making an additional contribution;
• reinvestment (at the expense of the enterprise's profit);
• by accounting for the assets of the merged enterprises.
Reasons for reduction:
• exit of the founders;
• optimization of capital;
• the need to compensate for losses.
These cases require amendments to the charter of the enterprise and state registration of this.
In Uzbekistan, several problems are observed in the formation of authorized capital by business
entities:
• Non-transparent valuation of real assets;
• Failure of founders to make contributions on time;
• Sometimes contradictory or unclear legislation;
• Subjectivity of valuation when adding assets to capital.
Also, the minimum capital requirement for small businesses is determined, which negatively
affects their financial stability.
Conclusions and proposals. The correct formation of authorized capital and its accurate
reflection in accounting are important tools for strengthening the legal basis of the enterprise's
activities, instilling confidence in external investors, and ensuring financial control. This capital
serves as a guarantee of the stability of the enterprise. The following proposals have been
developed:
1. Standardization of assessment procedures for the formation of authorized capital;
2. Review of the minimum amount of authorized capital and its adaptation to the specifics of the
industry;
3. Clarification of the legal status of types of property when forming capital;
4. Introduction of a system for continuous monitoring of the status of authorized capital;
5. Development of practical manuals for accountants in accordance with international standards
for accounting for authorized capital.
References
1.
1. Accounting Part 1: Textbook / A.A.Karimov, J.E.Kurbanbayev, S.A.Jumanazarov; – T.:
“Economics-Finance”, 2020. p.
2.
2.Barry Elliot, Jamie Elliot. Financial accounting and reporting. London, 2015. 17th
Edition.
3.
3.Harry I.Wolk, James L.Dodd, John J. Rozycki. Accounting Theory. 8th edition. SAGE
Publications.USA, 2013.
4.
4.Karimоv A., Kurbanbayev J., Jumanazarov S., Khalilov Sh. Financial accounting and
reporting. Textbook. - T.: “Economics-Finance”, 2018.
5.
5.Urazov K. B. Accounting and audit. Tashkent - 2004.
6.
6.Urazov K.B. Features of accounting in other industries. Textbook. Revised and updated
2nd edition. - T.: "Science and technology", 2019. - 540 p.
