Select the correct sequence of accounting events for share capital: A…

Select the correct sequence of accounting events for share capital:

A. Receive application money
B. Calls in advance
C. Issue of prospectus
D. Final call of share
E. Allotment of share

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → C, A, E, B, D

Shares are issued in a fixed series of steps.

C. Issue of prospectus — the company first invites the public through the prospectus.

A. Receive application money — investors apply and pay the application money.

E. Allotment of share — after minimum subscription, the shares are allotted and allotment money becomes due.

B. Calls in advance — a shareholder may pay a call before it is made; this can happen only after allotment and before the call falls due.

D. Final call of share — the last instalment is called at the end.

NCERT (2026-27 edition):
Issue of Prospectus – “… The company first issues the prospectus to the public.”

NCERT (2026-27 edition):
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):
Calls in Advance – “Sometimes shareholders pay a part or the whole of the amount of the calls not yet made. The amount so received from the shareholders is known as “Calls in Advance”. The amount received in advance is a liability of the company and should be credited to ‘Call in Advance Account.”

NCERT (2026-27 edition):
Issue of Shares – “… The first instalment is collected along with application and is thus, known as application money, the second on allotment (termed as allotment money), and the remaining instalments are termed as first call, second call and so on. The word final is suffixed to the last instalment.”