Question

Which of the following should be deducted from the share capital to find out paid up capital of a company?

• A. Calls in advance
• B. Calls in arrear
• C. Share forfeiture
• D. Discount on issue of shares

Answer 1

Answer: (B)

Calls in arrear

Paid up capital is the total amount which is paid by the shareholders when the company has called up the required amount per share.

The paid up capital is calculated after deducting the call-in-arrear from the share capital. This is because the call-in-arrear is the amount which has to be paid by shareholders in near future due to their inability to pay the amount now. After deducting it from share capital, the actual amount paid by shareholders is formulated.