Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Accounting for Shares

Question:

Match the following-

LIST 1 LIST 2
(A) Application Money should be at least (I) 25% of face value
(B) The interest rate on calls in Arrears (II) 12% p.a
(C) The interest rate on calls in Advance (III) 10% p.a.
(D) The amount of calls should not exceed (IV) 5% of face value

 Choose the correct answer from the options given below:

Options:

(A)-(IV), (B)-(II), (C)-(I), (D)-(III)

(A)-(IV), (B)-(II), (C)-(III), (D)-(I)

(A)-(II), (B)-(I), (C)-(IV), (D)-(III)

(A)-(IV), (B)-(III), (C)-(II), (D)-(I)

Correct Answer:

(A)-(IV), (B)-(III), (C)-(II), (D)-(I)

Explanation:

* Application Money should be at least- Application money should be at least 5% of the face value of the share. For e.g. if a share having face value of ₹100 is issued then minimum ₹5 must be collected by the company on application.

* The interest rate on calls in Arrears and The interest rate on calls in Advance- As per Companies Act, 2013, the maximum rate of interest on calls in advance is 12%p.a. As per Companies Act, 2013, the maximum rate of interest on calls in arrears is 10% p.a.

* The amount of calls should not exceed - Calls are essential in the process of making shares fully paid-up and collecting the total share amount from shareholders. Once shares are allotted, a company initiates calls. Two critical points concerning calls on shares are noteworthy. First, any call amount should not exceed 25% of the shares' face value. Second, there must be a minimum one-month interval between the issuance of two calls, unless the company's articles of association specify otherwise.