There are two statements marked as Assertion (A) and Reason (R). Mark your answer as per the options given below.

Assertion (A):  Calls not yet made from the shareholders but received in advance are shown as Paid-up Capital.
Reason (R):  Companies, if authorized by their Articles of Association can receive an amount against the call or calls yet to be made. Since it is not due, the amount so received is shown as Other Current Liabilities under Current liabilities.

Assertion (A) is not correct but the Reason (R) is correct.

The correct answer is option 4- Assertion (A) is not correct but the Reason (R) is correct.

Assertion (A):  Calls not yet made by the shareholders but received in advance are shown as Paid-up Capital. This is false as calls in advance is liability.
Reason (R):  Companies, if authorized by their Articles of Association can receive an amount against the call or calls yet to be made. Since it is not due, the amount so received is shown as Other Current Liabilities under Current liabilities. This is true.

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.” The amount received will be adjusted towards the payment of calls as and when they becomes due. Table F of the Companies Act provides for the payment of interest on calls in advance at a rate not exceeding 12% per annum.