Accountancy Part AAccounting for Shares

Give the correct sequence of the following with regard to issue of sh…

Give the correct sequence of the following with regard to issue of shares of a Public Ltd. Company:

A. Making the calls due
B. Receiving applications for shares
C. Issue of prospectus
D. Formation of Company
E. Allotment of shares

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 3

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

A company can issue shares only after it exists, and the money is collected in stages after the prospectus invites the public.

D. Formation of Company – the company is incorporated first.
C. Issue of prospectus – the invitation to the public to subscribe.
B. Receiving applications for shares – investors apply with the application money.
E. Allotment of shares – made once minimum subscription is received.
A. Making the calls due – the rest of the amount on shares is called after allotment.

NCERT (2026-27 edition):
Issue of Shares

Extract from the NCERT textbook

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. In the event of shares not being fully called up till the completion of allotment, the directors have the authority to ask for the remaining amount on shares as and when they decide about the same.”