Accountancy Part AAccounting for Shares

Arrange in correct sequence- (A) Share Allotment (B) Share Applicatio…

Arrange in correct sequence-

(A) Share Allotment

(B) Share Application

(D) Share Call

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 3

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

Shares pass through these steps in order, and forfeiture can come only after an amount due has not been paid:

(B) Share application — investors apply with the application money.
(A) Share allotment — shares are allotted once minimum subscription is received.
(D) Share call — the remaining amount is called up.
(C) Share forfeiture — shares of a holder who fails to pay the allotment or call money are forfeited.

NCERT (2026-27 edition):
Issue of Shares – “… • 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.”

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 – “… On Calls : Calls play a vital role in making shares fully paid-up and for realising the full amount of shares from the shareholders.”

NCERT (2026-27 edition):
Forfeiture of Shares – “It may happen that some shareholders fail to pay one or more instalments, viz. allotment money and/or call money. In such circumstances, the company can forfeit their shares, i.e. cancel their allotment and treat the amount already received thereon as forfeited to the company within the framework of the provisions in its articles.”