Subscribed capital is : (A) That part of authorised capital which is issued to the public for subscription. (B

Question

Q. Subscribed capital is : (A) That part of authorised capital which is issued to the public for subscription. (B) That part of issued capital which has been actually subscribed by the public. (C) That part of subscribed capital which has been called up on the shares. (D) That part of subscribed capital which has not yet been called up on the shares.

CBSECBSE Class XII Board 2020MCQ· 1mImportance★★★★★

✓ Free question

Concept understanding — Share Subscription Accounting

Share Subscription Accounting – A First Look

Think of a company raising money by selling pieces of itself. When you buy a share, you're not buying a product off a shelf — you're promising to pay for a part of the business. That promise, and the money that follows, is what share subscription accounting tracks.

The Everyday Intuition

Imagine you and three friends decide to start a small café. You each agree to contribute ₹10,000. But you don't all have the cash right now. One friend says, "I'll pay ₹5,000 now and the rest next month." Another says, "I'll pay the full amount after two months."

How do you keep track of who has paid what, and who still owes? You'd need a simple record: "Amount Promised" and "Amount Received." That's exactly what share subscription accounting does — but for a company with hundreds or thousands of investors.

The Precise Meaning

Share subscription is the process by which investors (subscribers) apply for shares of a company and agree to pay for them. The company records:

The amount called up by the board (the portion of face value demanded from shareholders)
The amount received from shareholders
The amount unpaid (calls in arrears)

The key accounts involved are:

Account	Nature	When Used
Share Capital Account	Liability (credit)	When shares are issued
Share Allotment Account	Personal (temporary)	When allotment money is due
Share Calls Account	Personal (temporary)	When call money is due
Calls in Arrears Account	Personal (debit)	When shareholders fail to pay
Bank Account	Real (asset)	When money is actually received

Why It Matters

Without proper subscription accounting, a company cannot:

Know how much capital it has actually collected
Track defaulting shareholders
Comply with the Companies Act, 2013
Prepare accurate financial statements

The law requires that share capital be shown separately as "Subscribed but not fully paid" and "Subscribed and fully paid" in the balance sheet.

The Accounting Treatment – Step by Step

Stage 1: Application Money Received

When investors apply for shares, they send application money (usually a part of the face value).

Journal Entry: Bank A/c Dr. [Amount received] To Share Application A/c [Amount received]

Stage 2: Allotment of Shares

When the company allots shares, the application money is transferred to Share Capital. The remaining allotment money becomes due.

Journal Entry (for allotment due): Share Allotment A/c Dr. [Amount due] To Share Capital A/c [Amount due]

Stage 3: Receiving Allotment Money

Journal Entry: Bank A/c Dr. [Amount received] To Share Allotment A/c [Amount received]

Stage 4: Calls Made and Received

If the company makes a first call, second call, etc.:

When call is made: Share First Call A/c Dr. [Amount due] To Share Capital A/c [Amount due] When call is received: Bank A/c Dr. [Amount received] To Share First Call A/c [Amount received]

Stage 5: Calls in Arrears

If a shareholder fails to pay a call:

Journal Entry: Calls in Arrears A/c Dr. [Amount unpaid] To Share Allotment/Call A/c [Amount unpaid]

The Balance Sheet Presentation (Proforma)

As per NCERT Class 12 Accountancy, the Share Capital section in the Balance Sheet appears as:

Particulars	Note No.	Amount (₹)
EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital	1	XXX
2. Non-Current Liabilities
3. Current Liabilities

Note 1: Share Capital

Particulars	Amount (₹)
Authorised Capital
... shares of ₹ ... each	XXX
Issued Capital
... shares of ₹ ... each	XXX
Subscribed Capital
Subscribed but not fully paid:
... shares of ₹ ... each, ₹ ... called up	XXX
Less: Calls in Arrears	(XXX)
Subscribed and fully paid:
... shares of ₹ ... each	XXX
Total Share Capital	XXX

Important

The key distinction: Subscribed but not fully paid shows shares where the company has called up only part of the face value. Subscribed and fully paid shows shares where the entire face value has been called and received.

A Simple Example (No Invented Data)

Suppose a company issues 10,000 shares of ₹10 each, payable as: ₹3 on application, ₹3 on allotment, ₹4 on first and final call.

All applications are received and allotment is made. All money is received except one shareholder holding 100 shares fails to pay the first and final call.

Journal Entries:

Bank A/c Dr. ₹30,000

To Share Application A/c ₹30,000
Share Application A/c Dr. ₹30,000

To Share Capital A/c ₹30,000
Share Allotment A/c Dr. ₹30,000

To Share Capital A/c ₹30,000
Bank A/c Dr. ₹30,000

To Share Allotment A/c ₹30,000
Share First & Final Call A/c Dr. ₹40,000

To Share Capital A/c ₹40,000
Bank A/c Dr. ₹39,600

Calls in Arrears A/c Dr. ₹400

To Share First & Final Call A/c ₹40,000

Balance Sheet Extract:

| Subscribed but not fully paid: | |

| 10,000 shares of ₹10 each, ₹10 called up | ₹1,00,000 |

| Less: Calls in Arrears | (₹400) |

| | ₹99,600 |

Watch out

A common mistake: Students often debit Share Capital when recording calls in arrears. Remember — Share Capital is credited when the call is made. Calls in Arrears is a separate debit account that reduces the net amount shown under Subscribed Capital.

The Core Idea

Share subscription accounting is simply tracking the journey of money from an investor's promise to the company's bank account — and recording any broken promises along the way. The Share Capital account always shows the total amount called up, while Calls in Arrears shows what's still missing.

Subscribed capital refers to the portion of issued capital for which the public has actually applied and agreed to take up shares.

Let's break down the concept of share capital in a company, as understanding the hierarchy is key to defining 'subscribed capital'. When a company is formed, its Memorandum of Association specifies the maximum amount of capital it is authorised to raise from the public. This is the starting point.

Authorised Capital (or Nominal/Registered Capital): This is the maximum capital a company is legally permitted to issue during its lifetime. It's stated in the company's Memorandum of Association. The company cannot issue shares beyond this limit without altering its Memorandum.
Issued Capital: This is the part of the authorised capital that the company has offered to the public for subscription. A company might not issue its entire authorised capital at once; it can issue shares in phases as and when funds are required.
Subscribed Capital: This is the crucial step for our question. Subscribed capital is the portion of the issued capital for which the public has actually applied and agreed to take up shares. It represents the nominal value of shares for which applications have been received and allotted. It can be less than or equal to the issued capital. For instance, if a company issues 10,000 shares, but the public applies for only 9,000 shares, then 9,000 shares constitute the subscribed capital.

Watch out

Do not confuse 'subscribed' with 'issued'. Issued capital is what the company offers; subscribed capital is what the public accepts (applies for and is allotted).
Called-up Capital: This is the part of the subscribed capital that the company has demanded from the shareholders. A company might not ask for the full nominal value of the shares at once. For example, if a share is ₹10, the company might call ₹3 on application, ₹2 on allotment, and ₹5 on the first call. The sum of these amounts called till a certain date is the called-up capital.
Paid-up Capital: This is the part of the called-up capital that the company has actually received from the shareholders. Sometimes, shareholders might fail to pay the called amount (these are 'calls in arrears'). Paid-up capital is the called-up capital minus calls in arrears.

Now, let's evaluate the given options based on this understanding:

(A) That part of authorised capital which is issued to the public for subscription.

This definition correctly describes Issued Capital, not subscribed capital. Issued capital is the portion of authorised capital offered to the public.
(B) That part of issued capital which has been actually subscribed by the public.

This definition precisely matches our understanding of Subscribed Capital. It is the portion of the shares offered (issued capital) that the public has applied for and agreed to take up.
(C) That part of subscribed capital which has been called up on the shares.

This definition describes Called-up Capital. It is the amount that the company has demanded from the shareholders out of the subscribed amount.
(D) That part of subscribed capital which has not yet been called up on the shares.

This describes Uncalled Capital, which is the remaining portion of subscribed capital that the company has not yet demanded from its shareholders. It is a component of subscribed capital, but not subscribed capital itself.

Therefore, the correct definition of subscribed capital is given in option (B).

✓Final answer

Subscribed capital is (B) That part of issued capital which has been actually subscribed by the public.

Same / Similar Concept — real previous-year questions on the same or a closely similar concept, not this exact question.

Showing the 12 most recent of 31 on this concept.

CBSE 2026Set ANNUAL1 mark
$Q. If applicants for 15000 equity shares were alloted 13500 shares on pro-rata basis, the types of subscription will be __________.$
›Reveal solutionSolution

Allotting fewer shares (13,500) than applied for (15,000) on a pro-rata basis indicates over-subscription.

Pro-rata allotment is used only when a company receives applications for MORE shares than it offers. Here applicants for 15,000 shares were given 13,500 shares proportionately, so the issue attracted more applications than shares available - this is a case of over-subscription (applications exceed shares offered).

✓Final answer
$It is a case of over-subscription.$
CBSE 2026Set ANNUAL1 markMCQ
$Q. Share Application A/c is$
(a) Personal A/c
(b) Real A/c
(c) Nominal A/c
(d) None of these
›Reveal solutionSolution

The Share Application A/c is a Personal Account - option (a).

The Share Application Account records the money received from and due to the applicants for shares; since it represents a group of persons (the applicants/shareholders), it is classified as a personal account under the traditional classification. (Cash/Bank is a real account; nominal accounts deal with expenses, losses, incomes and gains.)

✓Final answer
$(a) Personal A/c.$
CBSE 2026Set ANNUAL1 mark
$Q. A company sent letter of regret for 200 shares and allotment letters for 25,000 shares to its applicants. Application money was ₹ 20 per share. Calculate the amount of Application money which company is refunding?$
›Reveal solutionSolution

Amount of Application money refunded = ₹ 4,000.

The company sent a letter of regret (full rejection) for 200 shares and allotment letters for 25,000 shares. This means the company received applications for a total of 200 + 25,000 = 25,200 shares, but only 25,000 of these applications are being allotted shares; the remaining 200 shares' worth of applications are being entirely rejected.

Since application money was ₹20 per share, the refund due on the fully-rejected applications is:

Refund = 200 shares × ₹20 = ₹4,000

(The application money on the 25,000 allotted shares, i.e. 25,000 × ₹20 = ₹5,00,000, is retained by the company and adjusted/transferred towards share capital — it is not refunded.)

✓Final answer
$Application money refunded = 200 shares \times ₹20 = ₹ 4,000.$

CBSE 2025Set 67/6/11 markMCQ

Q. (a) A portion of the uncalled capital reserved by a company to be called only in the event of winding up of the company, is called : (A) Subscribed but not fully paid up capital (B) Unissued capital (C) Reserve capital (D) Subscribed capital

(OR)

(b) When applications for more shares of a company are received than the number of shares offered to the public for subscription, it is known as : (A) Over subscription (B) Full subscription (C) Subscription at premium (D) Under subscription

›Reveal solution

Part (a): (C) Reserve Capital — uncalled capital callable only on winding up. Part (b): (A) Over subscription — applications exceed shares offered.

Part (a)

A company's authorised capital splits into issued and unissued portions; issued capital may be partly called, leaving an uncalled portion. Under Section 65 of the Companies Act, 2013, a company may, by special resolution, resolve that a part of this uncalled capital shall not be called except in the event of winding up. This ring-fenced portion is Reserve Capital — a permanent security for creditors.

Option	Meaning
(A) Subscribed but not fully paid-up	Issued capital with some amount still callable at any time
(B) Unissued capital	Authorised capital never offered to the public
(C) Reserve capital	Uncalled capital reserved to be called only on winding up
(D) Subscribed capital	Face value of shares actually subscribed

Watch out

Reserve Capital ≠ Capital Reserve. Reserve Capital is uncalled share capital reserved for winding up; Capital Reserve is a reserve out of capital profits.

✓Final answer

Part (a): (C) Reserve capital .

Part (b)

When a company invites the public to subscribe, three outcomes are possible:

Under subscription — applications < shares offered.
Full subscription — applications = shares offered.
Over subscription — applications exceed shares offered; the company then allots pro-rata, rejects some applications, or a combination.

Subscription at premium refers to the price (above face value), not the volume of applications, so it is irrelevant here.

✓Final answer

Part (b): (A) Over subscription — applications received exceed the shares offered to the public.

CBSE 2025Set ANNUAL1 markMCQ
$Q. A company issued 10,000 shares of Rs. 10 each at a premium of 10%. The amount of premium will be (A) Rs. 10,000 (B) Rs. 20,000 (C) Rs. 8,000 (D) Rs. 5,000$
›Reveal solutionSolution

A 10 percent premium on 10,000 shares of Rs 10 each gives a total premium of Rs 10,000, so the answer is (A).

This is a straightforward BSEB Inter / Bihar Class-12 Accountancy premium calculation.

Particulars Working Amount
Face value per share given Rs 10
Premium rate given 10%
Premium per share 10 x 10% Re 1
Number of shares given 10,000
Total premium 10,000 x Re 1 Rs 10,000

So the total securities premium = 10,000 x Re 1 = Rs 10,000, which matches option (A). The other figures (Rs 20,000, Rs 8,000, Rs 5,000) do not fit this computation.

✓Final answer
$(A) Rs 10,000$
CBSE 2025Set ANNUAL1 markMCQ
$Q. Which account is to be debited on receive of calls in advance? (A) Calls in Arrear A/c (B) Bank A/c (C) Shareholder A/c (D) Calls in Advance A/c$
›Reveal solutionSolution

On receiving calls in advance, Bank A/c is debited (and Calls-in-Advance A/c is credited).

When a company receives call money before it is actually due, it records the receipt as Bank A/c Dr. To Calls-in-Advance A/c. The bank balance (an asset) increases, so Bank A/c is debited; Calls-in-Advance is a liability of the company until the call falls due, so it is credited. (Calls-in-Arrears, by contrast, is debited when a call is not received.) Hence on receipt of calls in advance the account debited is the Bank Account. This is a standard RBSE Rajasthan Class-12 Accountancy share-capital entry, consistent with the NCERT/CBSE commerce syllabus.

✓Final answer
$(B) Bank A/c$

Particulars	Working	Amount
Face value per share	given	Rs 10
Premium rate	given	10%
Premium per share	10 x 10%	Re 1
Number of shares	given	10,000
Total premium	10,000 x Re 1	Rs 10,000

CBSE 2025Set ANNUAL1 mark

Q. On 1st April, 2024 P Ltd. received in advance the final call of Rs. 3 per share on 10,000 equity shares. The final call was due on 15-5-2024. Journalise the above transaction.

›Reveal solution

Money received on 1st April for a call that becomes due only on 15th May is recorded as Calls-in-Advance, a liability, and is adjusted against the Final Call A/c only when the call actually falls due.

The final call of Rs. 3 per share on 10,000 equity shares = 10,000 × Rs. 3 = Rs. 30,000. Since this amount is received on 1st April, 2024 — before the call is actually made/due (15-5-2024) — it cannot be credited to the Share Final Call Account; it must be recorded as Calls-in-Advance, which is a liability of the company (an amount owed back to the shareholders in the form of shares until the call becomes due).

Journal Entries:

Date	Particulars	Dr. (Rs.)	Cr. (Rs.)
1-4-2024	Bank A/c Dr.	30,000
	To Calls-in-Advance A/c		30,000
	(Being final call of Rs. 3 per share on 10,000 shares received in advance)
15-5-2024	Equity Share Final Call A/c Dr.	30,000
	To Equity Share Capital A/c		30,000
	(Being final call of Rs. 3 per share made due on 10,000 shares)
15-5-2024	Calls-in-Advance A/c Dr.	30,000
	To Equity Share Final Call A/c		30,000
	(Being calls-in-advance adjusted against the final call now due)

✓Final answer

On 1-4-2024: Bank A/c Dr. Rs. 30,000; To Calls-in-Advance A/c Rs. 30,000. On 15-5-2024, this Rs. 30,000 Calls-in-Advance is adjusted against the Final Call A/c when it falls due.

CBSE 2025Set ANNUAL1 markMCQ
$Q. Arihant Ltd. invited applications for 20,000 Preference Shares @ Rs. 250 each. Applications were received for 25,000 Preference Shares. This situation is known as .........................$
(a) Oversubscription
(b) Undersubscription
(c) Full subscription
(d) Partial subscription
›Reveal solutionSolution

When the number of shares applied for is MORE than the number of shares offered by the company, the issue is said to be oversubscribed.

Explanation

Arihant Ltd. offered (invited applications for) 20,000 Preference Shares, but received applications for 25,000 shares — 5,000 shares more than were on offer.

Term Meaning
Oversubscription Applications received > Shares offered
Undersubscription Applications received < Shares offered
Full subscription Applications received = Shares offered

Since 25,000 > 20,000, this is a clear case of oversubscription. In practice the company would allot only 20,000 shares (using pro-rata allotment, rejection of some applications, or a combination) and refund or adjust the excess application money of the remaining 5,000 shares' worth.

✓Final answer
$This is Oversubscription, since applications (25,000 shares) exceeded the 20,000 shares actually offered by the company.$
CBSE 2024Set ANNUAL1 markMCQ
$Q. Application money cannot be less than ............................. of the nominal value of shares.$
(a) 5%.
(b) 10%.
(c) 15%.
(d) 20%.
›Reveal solutionSolution
Application money cannot be less than 5% of the nominal value of shares — option (a).

Under Section 39 of the Companies Act, 2013, the amount payable on application for every share shall not be less than 5% of the nominal (face) value of the share (or such other percentage as SEBI may specify for listed issues). This ensures a minimum commitment from applicants.

10%, 15% and 20% are not the statutory minimum prescribed by the Act.

Hence the correct minimum is 5%. This is a standard WBCHSE HS Accountancy company-accounts one-mark question, in line with the NCERT/CBSE share-capital curriculum.

✓Final answer
$(a) 5%.$
CBSE 2024Set ANNUAL1 markMCQ
$Q. X Ltd. issued 10,000 ordinary shares of ₹ 10 each at a premium of 20%. All moneys were received on shares. The amount of Share Capital is$
(a) ₹ 1,00,000.
(b) ₹ 1,20,000.
(c) Both
(a) and (b).
(d) ₹ 80,000.
›Reveal solutionSolution

The amount of Share Capital is ₹1,00,000 — option (a).

Shares of ₹10 each issued at a 20% premium means an issue price of ₹12 (₹10 face + ₹2 premium). But Share Capital is always recorded at face value only:

Item Working Amount (₹)
Share Capital 10,000 × 10 1,00,000
Securities Premium (shown separately) 10,000 × 2 20,000
Total money received 10,000 × 12 1,20,000

The premium of ₹20,000 is credited to Securities Premium A/c, not Share Capital. Hence Share Capital = ₹1,00,000.

✓Final answer
$(a) ₹1,00,000.$
CBSE 2024Set ANNUAL1 markMCQ
$Q. Pro-rata allotment applies in the case of:- A) Over-subscription B) Minimum-subscription C) Under-subscription D) Equal-subscription$
›Reveal solutionSolution

Pro-rata allotment is made to deal with over-subscription, allotting shares proportionately to applicants. Correct option: (A).

When the number of shares applied for exceeds the number offered (over-subscription), the company cannot allot to everyone in full. One method is pro-rata allotment, where every applicant is allotted shares in proportion to the number applied for, and excess application money is adjusted on allotment or refunded. Under-subscription or exact subscription needs no such proportionate scaling.

✓Final answer
$(A) Over-subscription$
CBSE 2024Set ANNUAL1 mark
$Q. Preeti limited had invited application for ₹10,000 equity share of ₹10 each at a premium of ₹1 each. Total application money received at ₹4 per share of ₹45,600. State the numbers of application that are received.$
›Reveal solutionSolution

Applications received = Total application money ÷ application money per share = 45,600 ÷ 4 = 11,400 shares.

The company invited applications for 10,000 shares; the application money was ₹4 per share and the total received was ₹45,600.

Step Working Amount
Total application money — ₹45,600
Application money per share — ₹4
Number of shares applied for 45,600 ÷ 4 11,400 shares

Since applications (11,400) exceed shares offered (10,000), the issue is over-subscribed.

✓Final answer
$Number of applications (shares applied for) = 11,400 shares .$

Term	Meaning
Oversubscription	Applications received > Shares offered
Undersubscription	Applications received < Shares offered
Full subscription	Applications received = Shares offered

Item	Working	Amount (₹)
Share Capital	10,000 × 10	1,00,000
Securities Premium (shown separately)	10,000 × 2	20,000
Total money received	10,000 × 12	1,20,000

Step	Working	Amount
Total application money	—	₹45,600
Application money per share	—	₹4
Number of shares applied for	45,600 ÷ 4	11,400 shares

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