Accountancy Part AAccounting for Shares

Arrange in a correct order: (A) Issue of prospectus (B) Checking/veri…

Arrange in a correct order:

(A) Issue of prospectus
(B) Checking/verifying minimum subscription
(C) Allotment of shares
(D) Making calls
(E) Receipt of applications for shares

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → (A), (E), (B), (C), (D)

Shares are first offered, then applied for; allotment can be made only after the minimum subscription is received, and calls follow allotment.

(A) Issue of prospectus — the company invites the public to subscribe.
(E) Receipt of applications for shares — investors apply with the application money.
(B) Checking/verifying minimum subscription — allotment is allowed only if the minimum subscription is received.
(C) Allotment of shares — shares are allotted to the applicants.
(D) Making calls — the remaining amount is asked for after allotment.

NCERT (2026-27 edition):
Issue of Prospectus – “The company first issues the prospectus to the public. Prospectus is an invitation to the public that a new company has come into existence and it needs funds for doing business. It contains complete information about the company and the manner in which the money is to be collected from the prospective investors.”

NCERT (2026-27 edition):
Receipt of Applications – “When prospectus is issued to the public, prospective investors intending to subscribe the share capital of the company would make an application along with the application money and deposit the same with a scheduled bank as specified in the prospectus. The company has to get minimum subscription within 120 days from the date of the issue of the prospectus. If the company fails to receive the same within the said period, the company cannot proceed for the allotment of shares and application money should be returned within 130 days of the date of issue of prospectus.”

NCERT (2026-27 edition):
Allotment of Shares – “If minimum subscription has been received, the company may proceed for the allotment of shares after fulfilling certain other legal formalities.”

NCERT (2026-27 edition):
Accounting Treatment

Extract from the NCERT textbook