To effectively match items between List-I and List-II, an understanding of the various capital types commonly encountered in accounting is essential:
- Nominal Capital: Also known as authorized or registered capital, this is the maximum capital a company is legally permitted to issue to shareholders as per its memorandum of association. Consequently, it is directly linked to the Memorandum of Association.
- Reserve Capital: This constitutes a portion of the subscribed capital that the company has, through a special resolution, decided not to demand from shareholders until the company's liquidation. Therefore, it is only called upon during winding up.
- Paid up Capital: This represents the actual funds received by the company from shareholders in return for stock shares. It is typically the capital that has been subscribed and paid for, meaning it has been offered to the public.
- Issued Capital: This is the segment of nominal capital that has been made available for subscription. It is often calculated as the called-up capital less any outstanding calls in arrears.
The corresponding matches for each capital type are as follows:
- (A) Nominal Capital — (III) Memorandum of Association
- (B) Reserve Capital — (IV) Called only at the time of winding up
- (C) Paid up Capital — (I) Offered to the public
- (D) Issued Capital — (II) Called up capital minus calls in arrears
The accurate pairing of the given options is: (A)-(III), (B)-(IV), (C)-(I), (D)-(II)