Company Accounts

Share Capital

Easy

common

Reserve capital is

A kind of capital reseve.

Part of called up capital.

Part of the subscribed capital decided not to be called up except in the event of winding up.

Part of capital not yet issued.

✅ Correct Option: 3

Reserve capital is created when a company passes a special resolution stating that a part of its uncalled capital will not be called up during the normal course of business. This portion can only be called upon during the winding up of the company.

To understand this better, consider the capital structure:

Issued Capital → Subscribed Capital → Called-up Capital and Uncalled Capital

The uncalled capital is the portion that shareholders have agreed to pay but the company hasn't yet demanded. Out of this uncalled capital, if the company decides through a special resolution that a specific part will remain untouched except during liquidation, that part becomes reserve capital.

Option 1 is incorrect because capital reserve refers to reserves created from capital profits (like profit on reissue of forfeited shares, premium on issue of shares), not a type of capital itself.

Option 2 is incorrect because called-up capital is the amount already demanded from shareholders. Reserve capital is specifically the part that will NOT be called up except during winding up.

Option 4 is incorrect because unissued capital is the authorized capital that hasn't been offered to the public yet. Reserve capital comes from already subscribed capital.

Option 3 is correct as it accurately describes that reserve capital is carved out from subscribed capital with the specific condition that it can only be utilized when the company is being wound up. This serves as a security cushion for the company's creditors.

2026: 11 May Shift 1

The balance of Share Forfeiture account is shown as an addition to the total paid-up capital of the company. Under which head and title of the Balance Sheet it will be shown, until the forfeited shares are reissued?

A. 'Share Capital' under the title "Liabilities and Equity"

B. 'Reserve and Surplus' under the title "Liabilities and Equity"

C. 'Shareholders' Funds' under the title of "Equity and Liabilities"

D. 'Share Capital' under the title 'Equity and Liabilities'

Choose the correct answer from the options given below:

2026: 13 May Shift 1

Consider the given steps below related to forfeiture of shares due to non receipt of allotment money and their re-issue and arrange them in correct sequence :-

(A) Reissue of forfeited shares and transfer of gain on reissue of forfeited shares.

(B) Notice to shareholder regarding non-payment of allotment money and call money.

(D) Forfeiture of shares for non-payment of allotment and call money.

Choose the correct sequence of the above steps from the options given below:

2026: 6 June Shift 1

Which of the following are related to forfeiture of shares issued on premium :

(A) Share capital is debited with called up amount

(B) Calls in Advance is credited

(D) Premium received on such Shares is debited, if it is received

Choose the correct answer from the options given below:

2025: 15 May Shift 2

It is available only for the creditors on winding up of the company.

2025: 3 June Shift 2

Match List-I with List-II

List-I	List-II
(A) Companies Limited by Shares	(I) When the company's property is not sufficient to pay off its debts, the private property of its members can be used for the purpose.
(B) Companies Limited by Guarantee	(II) Restricts the right to transfer its shares
(C) Unlimited Companies	(III) If a member has paid the full amount of the shares, there is no liability on his part whatsoever for the debts of the company.
(D) Private Company	(IV) The liability of its members is limited to the amount they undertake to contribute in the event of the company being wound up.

Choose the correct answer from the options given below:

2025: 14 May Shift 1

Steps for Forfeiture of Shares-

(A) Issue of Prospectus

(B) Shares Forfeiture

(D) Allotment of Shares

Choose the correct answer from the options given below:

Reserve capital is

Solution

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