Question

What is the correct sequence of types of capital in company's Balance sheet while preparing notes to accounts.
A. Issued Capital 
B. Subscribed and fully paid up capital 
C. Share forfeited Balance 
D. Authorised Capital 
E. Subscribed but not fully paid up capital 
Choose the correct answer from the options given below:

• A. C. B, D, E, A
• B. D, A, B, E, C
• C. A, B, C, D, E
• D. B. A, D, E, C

Answer 1

The Correct Option is B

Step 1: Authorized Capital (D)

Start with Authorized Capital, as it’s the maximum limit of capital the company can issue. This provides context for the other figures.

Step 2: Issued Capital (A)

Next, disclose the Issued Capital, which is the portion of authorized capital issued to shareholders.

Step 3: Subscribed and Fully Paid Up Capital (B)

From the issued capital, show the Subscribed and Fully Paid Up Capital, which is the amount fully paid by shareholders.

Step 4: Subscribed but Not Fully Paid Up Capital (E)

Then, disclose the Subscribed but Not Fully Paid Up Capital, which reflects amounts still due from shareholders.

Step 5: Share Forfeited Balance (C)

Finally, show the Share Forfeited Balance, which is an adjustment for forfeited shares.

Evaluate the Options

The correct sequence is D, A, B, E, C. Let’s check the options:

• Option 1: C, B, D, E, A: Starts with Share Forfeited Balance (C), which is incorrect as it’s typically the last item.
• Option 2: D, A, B, E, C: Matches the correct sequence: Authorized (D), Issued (A), Subscribed and Fully Paid (B), Subscribed but Not Fully Paid (E), and Share Forfeited Balance (C).
• Option 3: A, B, C, D, E: Starts with Issued Capital (A), skipping Authorized Capital, which is incorrect.
• Option 4: B, A, D, E, C: Starts with Subscribed and Fully Paid Up Capital (B), which is out of order.

Final Answer

The correct sequence of types of capital is D, A, B, E, C, which matches Option 2.