Question

Select the correct sequence of accounting events for share capital; 
A. Receive application money 
B. Calls in advance 
C. Issue of prospectus 
D. Final call of share 
E. Allotment of share 
Choose the correct answer from the options given below:

• A. C, A, E, B, D
• B. A, C, E, B, D
• C. B, C, A, D, E
• D. C, B, A, E, D

Hint:

Always remember the chronological steps: Prospectus → Application → Allotment → Calls → Final call.

Answer 1

The Correct Option is A

To understand the correct sequence of accounting events for share capital, let's analyze each step:

1. Issue of prospectus (C): The company first issues a prospectus to the public. This document provides details about the company, its financials, and the terms of the share issue to attract potential investors.
2. Receive application money (A): After the prospectus is issued, interested investors submit applications along with the application money for the shares.
3. Allotment of share (E): Once the applications are reviewed, the company allots shares to the applicants. This is an official confirmation of share ownership to the investors.
4. Calls in advance (B): This step involves the collection of any not-yet-due calls from shareholders who wish to pay in advance. However, this isn't a mandatory step but follows after allotment.
5. Final call of share (D): The final call is made to collect the remaining amount due on the shares from the shareholders.

Based on these steps, the correct sequence is: C, A, E, B, D.