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Interest on Capital Exceeds Profits

Share capital...

Question

Share capital account can be credited only when ________.

A

Application money is received

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B

Shares are allotted

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C

Pprospectus is issued

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D

None of the above

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Solution

The correct option is B Shares are allotted
The shareholders have only limited liability in the event of extreme loss or liquidation with excessive outside liability. Application money credited to Capital Account After the share allotment, the company will collect the remaining capital.

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