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 determine the accurate order of accounting events concerning share capital, we will examine each stage:

1. Prospectus Issuance (C): The company initiates the process by releasing a prospectus to the public. This document outlines the company's profile, financial status, and the terms of the share offering to solicit investment.
2. Application Money Receipt (A): Subsequent to the prospectus release, prospective investors submit their applications and accompanying application funds for shares.
3. Share Allotment (E): Following a review of submitted applications, the company formally allocates shares to the applicants, confirming their ownership.
4. Advance Calls (B): This stage pertains to the collection of unpaid share amounts from shareholders who opt to pay before the due date. It is an optional step that occurs after share allotment.
5. Final Call for Shares (D): The final call is a request for shareholders to remit the outstanding balance owed on their shares.

The correct sequence of these events is C, A, E, B, D.