Question

Issued capital is a part of :

• A. Reserve capital
• B. Unissued capital
• C. Authorised capital
• D. Subscribed capital

Hint:

Memorize the hierarchy of share capital: Authorised > Issued > Subscribed > Called-up > Paid-up capital. Each subsequent category is a part of the preceding one.

Answer 1

The Correct Option is C

Step 1: Understanding the Concept:
A company's share capital is classified into different categories based on its issuance and subscription status to represent its financial structure clearly.

Step 2: Detailed Explanation:
Let's understand the hierarchy of share capital:
- Authorised Capital: This is the maximum amount of capital a company is legally authorized to issue, as stated in its Memorandum of Association.
- Issued Capital: This is that specific portion of the Authorised Capital which the company has actually offered to the general public for subscription.
Since a company cannot issue more shares than it is authorized to, the Issued Capital is always a part of (or equal to, but never greater than) the Authorised Capital.

Step 3: Final Answer:
Issued capital is a part of Authorised capital.