Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Accounting for Shares

Question:

Arrange the following in proper sequence: Issued, Subscribed, Called Up and Paid Up capitals as they appear in the Balance Sheet of a company.

Options:

Issued, Called up, Subscribed, Paid Up

Issued, Subscribed, Called Up, Paid Up

Issued, Paid Up, Called Up, Subscribed

Called Up, Subscribed, Paid Up, Issued

Correct Answer:

Issued, Subscribed, Called Up, Paid Up

Explanation:

Issued Capital: This refers to the total value of shares that have been issued by the company to shareholders. Issued capital includes both the shares that have been fully paid up and the shares that have been partially paid up.
Subscribed Capital: Subscribed capital is the portion of the issued capital that shareholders have agreed to subscribe to or purchase. It represents the total value of shares that shareholders have committed to buying.
Called Up Capital: This is the amount that the company has requested from shareholders to be paid on the subscribed shares. When shares are issued, the company might not require the full subscription amount upfront. Instead, it calls for payments in instalments or "calls." The called up capital is the total amount of these calls.
Paid Up Capital: Paid up capital is the portion of the called up capital that shareholders have actually paid to the company. It represents the amount of money that shareholders have contributed and for which they have fulfilled their payment obligations.
Putting them in the proper sequence as they appear in the Balance Sheet of a company:
Issued Capital -> Subscribed Capital -> Called Up Capital -> Paid Up Capital