Target Exam

CUET

Subject

-- Accountancy Part A

Chapter

Accounting for Shares

Question:

When full amount is due on any call but it is not received, then the short fall is debited to which account?

Options:

Calls-in-advance

Calls-in-arrears

Share Capital

Suspense A/c

Correct Answer:

Calls-in-arrears

Explanation:

The correct answer is option 2- Calls-in-arrears.

When the full amount due on any call is not received, the short fall is debited to the "Calls-in-arrear" account. 

It may happen that shareholders do not pay the call amount on due date. When any shareholder fails to pay the amount due on allotment or on any of the calls, such amount is known as ‘Calls in Arrears’/‘Unpaid Calls’. Calls in Arrears represent the debit balance of all the calls account. Such amount shall appear as ‘Note to Accounts'. However, where a company maintains ‘Calls in Arrears’ Account, it needs to pass the following additional journal entry:
Calls in Arrears A/c Dr.
    To Share First Call Account A/c
    To Share Second and Final Call Account A/c