Accountancy Part AAccounting for Shares

Identify correct sequence in reference to Issue of Shares. (A) Receip…

Identify correct sequence in reference to Issue of Shares.

(A) Receipt of Application
(B) Forfeiture of shares
(C) Allotment of shares
(D) Issue of prospectus
(E) Call in arrears

Choose the correct answer from the options given below :

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → (D), (A), (C), (E), (B)

(D) Issue of prospectus — first. The company invites the public to subscribe.

(A) Receipt of Application — second. Investors apply with application money.

(C) Allotment of shares — third. Once minimum subscription is received, shares are allotted.

(E) Call in arrears — fourth. It arises when a shareholder fails to pay the allotment or a call.

(B) Forfeiture of shares — last. Shares of the defaulting shareholder are forfeited for non-payment.

NCERT (2026-27 edition):
Issue of Shares

Extract from the NCERT textbook

NCERT (2026-27 edition):
Calls in Arrears – “It may happen that shareholders do not pay the call amount on due date. When any shareholder fails to pay the amount due on allotment or on any of the calls, such amount is known as ‘Calls in Arrears’/‘Unpaid Calls’.”

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.”