Why Would a Company Reduce Its Own Share Capital? Internal Reconstruction Made Simple

In this video, you'll learn Internal Reconstruction and Capital Reduction from first principles. Instead of memorizing journal entries, you'll understand why companies reduce share capital, how accumulated losses are eliminated, and how to prepare the revised Balance Sheet after reconstruction. This beginner-friendly lesson is designed for B.Com, BBA, CA Foundation, CMA Foundation, and university accounting students, making complex corporate accounting easy to understand. In this video, you'll learn: Meaning and objectives of Internal Reconstruction Why companies reduce share capital Capital Reduction under the Companies Act Capital Reduction Account explained Journal entries for Internal Reconstruction Writing off accumulated losses and fictitious assets Reduction of overvalued assets Preparation of the Capital Reduction Account Preparation of the Revised Balance Sheet Complete worked numerical example Common mistakes in university exams Learning Outcomes After watching this video, you'll be able to: Explain the purpose of Internal Reconstruction. Pass journal entries confidently. Prepare Capital Reduction Accounts. Prepare revised Balance Sheets after reconstruction. Solve university examination problems with confidence. If this lesson helped you, Like, Share, and Subscribe to B.Com Accounting Made Easy for more concept-first accounting tutorials.