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Home Questions DNGTQD4G2U
Target Exam

CUET

Subject

Accountancy

Chapter

Accounting for Shares

Question:

Match List-I with List-II.

List I List II
A. Capital called only in the event of winding up of the company I. Nominal Capital
B. Other name of Registered Capital II. Issued Capital
C. Subscribed Capital is a part of which capital III. Capital Reserve
D. A type of capital profit IV. Reserve Capital

Choose the correct answer from below.

Options:

A-III,  B-I, C-II, D-IV

A-IV,  B-I, C-II, D-III

A-III,  B-II, C-I, D-IV

A-IV,  B-II, C-I, D-III

Correct Answer:

A-IV,  B-I, C-II, D-III

Explanation:

The correct answer is option (2) : A-IV,  B-I, C-II, D-III.

* Capital called only in the event of winding up of the company- Reserve Capital. Reserve capital refers to the portion of a company's capital that is only called upon in the event of the company being liquidated. It serves as a safety net for creditors.

* Other name of Registered Capital- Nominal Capital. Authorised capital is the amount of share capital which a company is authorised to issue by its Memorandum of Association. The company cannot raise more than the amount of capital as specified in the Memorandum of Association. It is also called Nominal or Registered capital. The authorised capital can be increased or decreased as per the procedure laid down in the Companies Act. It should be noted that the company need not issue the entire authorised capital for public subscription at a time. Depending upon its requirement, it may issue share capital but in any case, it should not be more than the amount of authorised capital.

* Subscribed Capital is a part of which capital- Issued Capital. Subscribed Capital is that part of the issued capital which has been actually subscribed by the public. When the shares offered for public subscription are subscribed fully by the public the issued capital and subscribed capital would be the same. It may be noted that ultimately, the subscribed capital may be equal to or less than issued capital. In case the number of shares subscribed is less than what is offered, the company allots only the number of shares for which subscription has been received. In case it is higher than what is offered, the allotment will be equal to the offer. In other words, the fact of oversubscription is not reflected in the books.

* A type of capital profit- Capital Reserve. Capital reserve is a type of reserve account created from profits generated from non-operating activities like the sale of assets, revaluation of assets, or premiums received on the issue of shares.

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