Money received in advance from shareholders before it is actually called-up by the directors is : Option 1: Debited to calls in advance account Option 2: Credited to calls in advance account Option 3: Debited to calls account Option 4: Credited to calls account

Answer: Credited to calls in advance account. Solution: When shareholders pay money before the directors officially call for it, this is treated as Calls in Advance. From the company's perspective, this advance payment creates a liability because: - The company has received the money (asset increased) - But hasn't yet made the official call for this amount - The company is obligated to adjust this amount against future calls The journal entry for receiving advance payment would be: Bank/Cash A/c Dr. To Calls in Advance A/c Since Calls in Advance is a liability account (appears under Current Liabilities in the Balance Sheet), any receipt of advance payment must be credited to this account. Think of it this way: When someone pays you in advance, you owe them the service/product later. Similarly, the company owes the adjustment of this amount against future calls → it's a liability → credit balance. Correct Answer: Option 2 - Credited to calls in advance account

Company Accounts

Share Capital

Easy

common

Money received in advance from shareholders before it is actually called-up by the directors is :

Debited to calls in advance account

Credited to calls in advance account

Debited to calls account

Credited to calls account

✅ Correct Option: 2

When shareholders pay money before the directors officially call for it, this is treated as Calls in Advance.

From the company's perspective, this advance payment creates a liability because:

The company has received the money (asset increased)
But hasn't yet made the official call for this amount
The company is obligated to adjust this amount against future calls

The journal entry for receiving advance payment would be:

$\text{Bank/Cash A/c} \quad \text{Dr.}$

$\quad \text{To Calls in Advance A/c}$

Since Calls in Advance is a liability account (appears under Current Liabilities in the Balance Sheet), any receipt of advance payment must be credited to this account.

Think of it this way: When someone pays you in advance, you owe them the service/product later. Similarly, the company owes the adjustment of this amount against future calls → it's a liability → credit balance.

Correct Answer: Option 2 - Credited to calls in advance account

2025: 29 May Shift 2

In a Journal Entry of Forfeiture of Shares, Share Capital Account will be :-

2026: 13 May Shift 2

Due to non-payment of call money, a company has forfeited shares which were issued at premium earlier and the premium amount has been received on those shares. How securities premium reserve account will be shown in the journal entry of forfeiture of shares ?

2025: 16 May Shift 1

Balance of share forfeiture account is shown in the balance sheet under which item :

2023: 20 June Shift 2

Arrange the following in the context of "Buy Back of Shares".

A. Articles of Association must authorise Buy Back of share

B. Buy Back should be completed within 12 months

C. Maintaining debt equity ratio of not more than 2:1 after Buy Back

D. Passing Special Resolution in annual general meeting

E. Filing solvency declaration with registrar and SEBI

Choose the correct answer from the options given below:

2024

Match List-I with List-II

2025: 27 May Shift 2

On the basis of the number of members, companies can be divided into:

(A) Unlimited Company

(B) Public Company

(D) One Person Company (OPC)

Choose the correct answer from the options given below:

Money received in advance from shareholders before it is actually called-up by the directors is :

Solution

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