In which order, the following types of share capital are shown in the balance sheet of a company?
(A) Subscribed Capital
(B) Called up Capital
(C) Issued Capital
(D) Authorized Capital
Choose the correct answer from the options given below:
In which order, the following types of share capital are shown in the balance sheet of a company?
(A) Subscribed Capital
(B) Called up Capital
(C) Issued Capital
(D) Authorized Capital
Choose the correct answer from the options given below:
Solution
In a company's balance sheet, share capital is presented in a hierarchical manner, starting from the broadest category to the most specific.
Authorized Capital comes first as it represents the maximum capital a company can raise as per its Memorandum of Association. This is the ceiling limit.
Issued Capital follows next, showing the portion of authorized capital that the company has actually offered to the public for subscription.
Subscribed Capital appears third, indicating the portion of issued capital for which applications have been received and shares have been allotted to shareholders.
Called-up Capital is shown last, representing the amount the company has demanded from shareholders out of the subscribed capital. Companies may call only a portion of the face value initially.
This presentation follows the logical flow: Total Capacity → What was Offered → What was Applied For → What was Demanded for Payment
The relationship can be understood as:
- Authorized Capital ≥ Issued Capital ≥ Subscribed Capital ≥ Called-up Capital ≥ Paid-up Capital
Correct Answer: Option 2 - (D), (C), (A), (B)
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