Theory question 102
Company AccountsExplain each of the following: (a) authorized share capital; (b) issued share capital; (c) called-up capital; (d) calls in arrears; (e) paid-up capital.
Show the model answer
Model answer
(a) Authorised (nominal/registered) capital: the maximum share capital a company may issue, stated in its Memorandum of Association.
(b) Issued capital: the part of authorised capital actually issued (allotted) to shareholders.
(c) Called-up capital: the part of the issued capital that shareholders have been asked to pay so far.
(d) Calls in arrears: amounts called up that shareholders have not yet paid.
(e) Paid-up capital: the part of called-up capital actually received (called-up capital less calls in arrears).
Explanation
Show how each one is a part of the one before it.