Write a brief note on calls in advance.

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Q. Write a brief note on calls in advance.

Tamil Nadu DgeTamil Nadu HSC (DGE) Commerce Board 2023Subjective· 3mImportance★★★★★

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Calls in advance is the excess money received from shareholders over the amount called up; it is a company liability that carries interest and is adjusted against future calls.

Meaning

Sometimes a shareholder pays the whole or part of the amount not yet called up on their shares. Such an amount received in excess of the called-up amount is known as calls in advance. In simple terms, it is money paid by a shareholder before the company makes the relevant call.

Key features

Nature — it is a liability of the company (money it owes back / must adjust), not income, and is shown separately on the liabilities side of the Balance Sheet under current liabilities.
Authority — a company can accept calls in advance only if authorised by its Articles of Association.
Interest — the company pays interest on calls in advance at the rate specified in the Articles (as per Table F, up to 12% p.a.). This interest is payable even if the company earns no profit.
No voting rights — the shareholder gets no voting rights on the amount paid in advance until it is actually called up. …

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

CBSE 2026Set MARCH1 markMCQ
$Q. The amount received over and above the par value is credited to :$
(a) Share capital account
(b) Securities premium account
(c) Forfeited shares account
(d) Calls in advance account
›Reveal solutionSolution
Amount received above par value = premium → credited to Securities Premium account. Option (b).

A share has a face/par value (say ₹10). If a company issues it at ₹12, the ₹10 is capital and the extra ₹2 is a premium on issue.

Share Capital account is credited only with the nominal (face) value called up.

The excess over face value is a capital receipt and must be credited to the Securities Premium account (a statutory reserve with restricted uses under the Companies Act — e.g. issuing bonus shares, writing off preliminary expenses). …
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CBSE 2025Set MARCH1 markMCQ
$Q. When shares are issued for purchase of assets, the amount should be credited to :$
(a) Vendor's A/c
(b) Sundry Assets A/c
(c) Share Capital A/c
(d) Bank A/c
›Reveal solutionSolution
Shares issued for the purchase of assets are credited to the Share Capital Account.

When a company buys assets and pays the vendor by issuing shares (Company Accounts, TN HSC Commerce), the entries are:

On purchase: Sundry Assets A/c Dr — To Vendor's A/c

On issue of shares to vendor: Vendor's A/c Dr — To Share Capital A/c …
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CBSE 2024Set MARCH1 markMCQ
$Q. The amount received over and above the par value is credited to :$
(a) Share capital account
(b) Securities premium account
(c) Forfeited shares account
(d) Calls in advance account
›Reveal solutionSolution
The excess of issue price over face value is share premium, credited to the Securities Premium account.

In the Tamil Nadu HSC Class-12 Accountancy syllabus (Company Accounts), a share has a fixed par/face value. A company may issue it at par, at a premium, or (rarely) at a discount.

If shares are issued at a premium, the price charged is higher than the face value. Only the face value is credited to Share Capital A/c; the extra amount (the premium) is credited to the Securities Premium A/c.

Securities premium is a capital reserve, governed by the Companies Act, and can be used only for specified purposes (issuing bonus shares, writing off preliminary expenses, providing premium on redemption, buy-back, etc.). …
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CBSE 2022Set MARCH1 markMCQ
$Q. The amount received over and above the par value is credited to ________.$
(a) Share capital account
(b) Securities premium account
(c) Forfeited shares account
(d) Calls in advance account
›Reveal solutionSolution
The excess of issue price over par (face) value is share premium and is credited to the Securities Premium Account, so the answer is option (b).

When a company issues shares, the price collected can be split into two parts:

The par (face) value, which goes to the Share Capital Account.

Any amount collected over and above the par value, which is the premium.

Under the Companies Act, the premium collected cannot be treated as ordinary revenue or as share capital — it is a capital receipt kept in a distinct Securities Premium Account, whose use is restricted by law (e.g. issuing bonus shares, writing off preliminary expenses or discount on issue, premium on redemption).

Why the other options are wrong: …
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CBSE 2020Set MARCH1 markMCQ
$Q. When shares are issued for purchase of assets, the amount should be credited to :$
(a) Bank Account
(b) Vendors Account
(c) Sundry Assets Account
(d) Share Capital Account
›Reveal solutionSolution
On issue of shares for the purchase of assets, Share Capital Account is credited — option (d).

When a company buys assets and pays by issuing shares to the vendor, two stages arise:

On purchase: Sundry Assets A/c Dr, To Vendor's A/c.

On issue of shares to settle the vendor: Vendor's A/c Dr, To Share Capital A/c (and Securities Premium, if issued at a premium). …
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CBSE 2020Set MARCH1 markMCQ
$Q. Match the following :$
(1) Under subscription —
(i) Amount prepaid for calls
(2) Over subscription —
(ii) Subscription above the offered shares
(3) Calls in arrear —
(iii) Subscription below the offered shares
(4) Calls in advance —
(iv) Amount unpaid on calls
(a) (1)-(iii), (2)-(iv), (3)-(i), (4)-(ii)
(b) (1)-(i), (2)-(ii), (3)-(iii), (4)-(iv)
(c) (1)-(iv), (2)-(iii), (3)-(ii), (4)-(i)
(d) (1)-(iii), (2)-(ii), (3)-(iv), (4)-(i)
›Reveal solutionSolution

Correct matching is (1)-(iii), (2)-(ii), (3)-(iv), (4)-(i) — option (d).

Matching each share-issue term to its meaning:

Term Meaning Match
(1) Under subscription Subscription below the offered shares (iii)
(2) Over subscription Subscription above the offered shares (ii)
(3) Calls in arrear Amount unpaid on calls (iv)

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Term	Meaning	Match
(1) Under subscription	Subscription below the offered shares	(iii)
(2) Over subscription	Subscription above the offered shares	(ii)
(3) Calls in arrear	Amount unpaid on calls	(iv)

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Q.Write a brief note on calls in advance.

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Q.Write a brief note on calls in advance.

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