Which of the following statement is false?

Shares can be issued for cash or any other consideration.

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The share application money is automatically converted to share capital.

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In the event of over subscription, excess amount has to be refunded or a pro rata allotment is to be made.

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Called up capital is that part of the subscribed capital, that has been called up.

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Solution

The correct option is B
The share application money is automatically converted to share capital.

The share application money is automatically converted to share capital is a false statement.

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PRACTICAL PROBLEMS

(Calculation of different types of Capital):

From the following details calculate authorised capital, issued, subscribed, called up and paid up share Capital and also calls in arrear and uncalled capital:

Pankaj Ltd. was formed with a capital of Rs 5,00,000 divided in to 5,000 shares of Rs 100 each. Of these 1,000 shares were issued to the vendor as fully paid in payment of purchase of machinery. 3,000 shares were offered to the public and of these 2,500 shares were applied and allotted. Rs 10 was payable on application and Rs 25 on allotment. The balance was yet to be called. All the money called up was duly received with the exception of allotment money on 300 shares.

Q. If a company receives excess application money and the application money equal to shares issued transferred to Share Capital A/c and application money received on excess shares-some money is adjusted and against allotment and remaining was refunded, then which of the following entry is correct?

Q. Himmat Ltd has authorised share capital of ₹ 50,00,000 divided into 5,00,000 Equity Shares of ₹ 10 each . It has existing issued and paid up capital of ₹ 5,00,000. It further issued to public 1,50,000 Equity Shares at par for subscription payable as under:

On Application:	₹ 3
On Allotment:	₹ 4 and
On Call:	Balance Amount.

The issue was fully subscribed and allotment was made to all the applicants . Call was made during the year and was duly received.
Show share capital of the company in the Balance Sheet of the Company.

It is that part of the subscribed capital which has been called up on the shares. It is known as ___

Q. A company invited applications for 25,000 equity shares of Rs 10 each and received 30,000 applications along with the application money of Rs 4 per share. Which of the following alternatives can be followed?
I. Refund the excess applications.
II. Make pro rata allotment to all the applicants, and refund the excess application money.
III. Not to allot any shares to some applicants, full allotment to some of the applicants and pro rata allotment to the rest of the applicants.
IV. Not to allot any shares to some applicants and make pro rate allotment to other applicants.
V. Make pro rata allotment to all the applicants and adjust the excess money received towards call money.

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Which of the following statement is false?

The correct option is B The share application money is automatically converted to share capital. The share application money is automatically converted to share capital is a false statement.

The correct option is B
The share application money is automatically converted to share capital.

The share application money is automatically converted to share capital is a false statement.