Arrange Categories of Share Capital into correct order-
(A) Subscribed Capital
(B) Authorised Capital
(C) Issued Capital
(D) Called up Capital
Choose the correct answer from the options given below:
Arrange Categories of Share Capital into correct order-
(A) Subscribed Capital
(B) Authorised Capital
(C) Issued Capital
(D) Called up Capital
Choose the correct answer from the options given below:
Solution
The correct hierarchical order of share capital categories follows the flow of capital from authorization to actual collection:
Authorised Capital (B) is the maximum capital a company can raise as per its Memorandum of Association. This is the starting point.
Issued Capital (C) is the portion of authorised capital that the company offers to the public for subscription.
Relationship: Issued Capital ≤ Authorised Capital
Subscribed Capital (A) is the portion of issued capital that investors actually apply for and is allotted to them.
Relationship: Subscribed Capital ≤ Issued Capital
Called up Capital (D) is the portion of subscribed capital that the company calls upon shareholders to pay (since shares may be called in installments).
Relationship: Called up Capital ≤ Subscribed Capital
The logical sequence represents the progressive narrowing down of share capital:
Authorised → Issued → Subscribed → Called up
Therefore: (B), (C), (A), (D)
The correct answer is Option 1.
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