Accountancy Part AAccounting for Shares

Arrange the following steps in correct sequence with regard to Shares…

Arrange the following steps in correct sequence with regard to Shares of a company.

(A) Making Calls

(B) Forfeiture of Shares

(D) Calls in Arrears

(E) Reissue of Shares

Choose the correct answer from the options given below :

Answer & explanation

Correct answer: option 2

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

Each step can happen only after the one before it:

(C) Issue of Prospectus — the company first invites the public to apply.
(A) Making Calls — after allotment, the balance on the shares is called up.
(D) Calls in Arrears — some shareholders fail to pay the amount called.
(B) Forfeiture of Shares — the shares of the defaulting shareholders are forfeited.
(E) Reissue of Shares — the forfeited shares are reissued to new buyers.

NCERT (2026-27 edition):
Issue of Shares

Extract from the NCERT textbook

NCERT (2026-27 edition):
Summary – “… 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’.”

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.”

NCERT (2026-27 edition):
Reissue of Forfeited Shares – “The directors can either cancel or re-issue the forefeited shares. In most cases, they reissue such shares which may be at par, at premium or at a discount.”