Question:
Money received in advance from the shareholders before it is actually called up by the directors is :
Money received in advance from the shareholders before it is actually called up by the directors is :
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Advance money from shareholders is treated as liability and credited to "Calls in Advance A/c" until due.
Updated On: Jul 4, 2025
- credited to calls in advance account.
- debited to calls in advance account.
- credited to calls account.
- debited to calls in arrears account.
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The Correct Option is A
Solution and Explanation
When shareholders pay before a call is made, such money is treated as liability and recorded in “Calls in Advance” account. Since it’s not yet due, it cannot be part of Share Capital and is thus a liability.
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