Accountancy Part AAccounting for Shares

Arrange the following in proper sequence, related to issue and forfei…

Arrange the following in proper sequence, related to issue and forfeiture of shares

(A) Calls in arrears

(B) Shares are re-issued

(D) Shares forfeited for non payment of money

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 4

The correct answer is Option (4) → (C), (A), (D), (B)

Forfeiture follows a chain of events, each caused by the one before it:

(C) Call money become due — first the company makes a call and the amount falls due from the shareholders.
(A) Calls in arrears — when a shareholder does not pay the call by the due date, the unpaid amount becomes calls in arrears.
(D) Shares forfeited for non payment of money — if the arrears stay unpaid after notice, the directors cancel the shares, and the amount already paid is forfeited to the company.
(B) Shares are re-issued — only after forfeiture do the shares belong to the company again, so only then can they be reissued to new holders.

NCERT (2026-27 edition):
Termes Used in the Chapter – “… Calls in Arrears: Sometimes, the full amount called on allotment and/or call (calls) is not received from the allottees/shareholders. The amount not so received are cumulatively called ‘Unpaid calls’ or ‘Calls in Arrears’.”

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.”

Termes Used in the Chapter – “… Reissue of Shares: The management of a company is vested with the power to reissue the shares once forfeited by it, subject of course, to the terms and conditions in the articles of association relating to the same.”