Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Accounting for Shares

Question:

What determines the timing of the payment of calls by shareholders?

Options:

The company's annual report

The stock market's performance

The articles of association of the company and the prospectus

The government's regulations on shares

Correct Answer:

The articles of association of the company and the prospectus

Explanation:

Calls are integral for achieving full payment on shares and collecting the complete share value from shareholders. If shares remain partially paid by the end of the allotment process, the company's directors hold the power to request the outstanding amount on shares whenever they choose to do so. Moreover, the timeline for shareholders to make call payments might be established during the initial share issuance and communicated through the prospectus.