Q.What is Call-in-Arrear Capital? Or What is Uncalled Capital?
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Calls In Arrears – A First Look
Think of buying something on instalments. You order a phone for ₹30,000, pay ₹10,000 now, and promise to pay ₹10,000 next month and ₹10,000 the month after. If you miss the second instalment, you still owe that ₹10,000. That unpaid amount is exactly what Calls In Arrears means in the world of company accounts.
A company issues shares, and shareholders pay for them in stages: Application, Allotment, and then one or more Calls. If a shareholder fails to pay any of these amounts on the due date, that unpaid sum is called Calls In Arrears.
Why It Matters
The company needs that money to run its business. More importantly, the company has a legal right to recover it. The shareholder remains liable. The company can also charge interest on calls in arrears at the rate specified in the Articles of Association (usually 8–12% per annum). If the shareholder still doesn't pay, the company may eventually forfeit the shares.
Accounting Treatment – The Journal Entry
When a shareholder does not pay a call amount, the company does not simply ignore it. It records the amount as a receivable. The rule is:
Debit Calls In Arrears Account (a personal account representing the amount due from shareholders)
Credit the respective Call Account (Share Allotment A/c, Share First Call A/c, etc.)
The journal entry looks like this:
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| Calls In Arrears A/c ………Dr. | xxx | |||
| To Share Allotment A/c | xxx | |||
| To Share First Call A/c | xxx | |||
| (Being the amount due on calls not received) |
Later, when the shareholder pays the arrears, the entry is reversed:
| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| Bank A/c ………Dr. | xxx | |||
| To Calls In Arrears A/c | xxx | |||
| (Being the arrears received) |
Where It Appears in the Balance Sheet
The Calls In Arrears account is not an expense. It is a deduction from the Subscribed Capital on the Equity and Liabilities side of the Balance Sheet. The NCERT textbook shows it like this:
Subscribed Capital
(Subscribed and fully paid-up) ……… ₹ X
Less: Calls in Arrears ……… (₹ Y)
Subscribed and paid-up capital ……… ₹ (X – Y)
Here is the exact format as per NCERT (Chapter: Accounting for Share Capital):
| Particulars | Note No. | Amount (₹) |
|---|---|---|
| EQUITY AND LIABILITIES | ||
| 1. Shareholders' Funds | ||
| (a) Share Capital | 1 | X |
| 2. Non-Current Liabilities | ||
| 3. Current Liabilities | ||
| TOTAL | X |
Note 1 – Share Capital:
| Particulars | Amount (₹) |
|---|---|
| Authorised Capital | |
| … shares of ₹ … each | … |
| Issued Capital | |
| … shares of ₹ … each | … |
| Subscribed Capital | |
| Subscribed but not fully paid-up | … |
| Less: Calls in Arrears | (…) |
| Subscribed and fully paid-up | … |
Do not show Calls In Arrears as an asset. It is a deduction from capital. Many students mistakenly put it under Current Assets — that is wrong.
Interest on Calls in Arrears …
Calls-in-Arrear is the amount called up by the company but not yet paid by shareholders; it is deducted from the called-up capital. …
Calls-in-Arrear (Call-in-Arrear Capital) is the amount of allotment/call money due but unpaid by shareholders; it is shown as a deduction from called-up capital.
It represents the unpaid part of the capital already called; the company may charge interest on it as per the Articles.
…
Showing the 12 most recent of 33 on this concept.
- CBSE 2026Set ANNUAL1 markMCQQ.Interest rate on calls in arrears as per table 'F' is :(a) 5%(b) 8%(c) 10%(d) 12%
›Reveal solutionSolution
Correct option: (c) 10%.
Under Table F of the Companies Act, 2013, interest on calls-in-arrears (unpaid call money) may be charged at a rate not exceeding 10% per a …
- CBSE 2026Set ANNUAL1 markMCQQ.Sujal Ltd. invited applications for 40000 Equity Shares of ₹100 each, payable as follows: On Application—₹40 per share; On Allotment—₹40 per share; On First and Final Call—₹20 per share. All the money due was received, except Priya holding 1000 Equity Shares failed to pay the final call money. Calls-in-Arrears A/c will be debited by(a) ₹40,000(b) ₹80,000(c) ₹20,000(d) ₹1,00,000
›Reveal solutionSolution
Calls-in-Arrears is debited only with the unpaid portion of the call actually due — here, 1,000 shares × ₹20 (final call) = ₹20,000.
Calls-in-Arrears A/c is used to track money that a company has called up on its shares (i.e., formally demanded from shareholders) but which some shareholders have failed to pay. It is debited only with the specific instalment(s) that remain unpaid — not the full value of the shares.
Here, Sujal Ltd. called up money on application (₹40), allotment (₹40), and the first & final call (₹20) — total ₹100 per share, matching the face value. Priya, holding 1,000 equity shares, paid everything except the final call of ₹20 per share.
Calls-in-Arrears = Unpaid call amount × Number of shares
= ₹20 × 1,000 shares
= ₹20,000
Journal entry (for context): …
- CBSE 2025Set ANNUAL1 markMCQQ.Which of the following should be deducted from the called-up capital to find out paid-up capital ? (A) Call-in-advance (B) Calls-in-arrear (C) Share forfeiture (D) Premium
›Reveal solutionSolution
Calls-in-arrear is deducted from called-up capital to arrive at paid-up capital, so the answer is (B).
The relationship is: Paid-up Capital = Called-up Capital minus Calls-in-Arrear.
- Calls-in-Arrear (B) is the amount that has been called on shares but not yet paid by shareholders; since it has not been received, it is deducted from the called-up capital.
- Calls-in-advance (A) is money received before being called — it does not reduce paid-up capital. …
- CBSE 2025Set ANNUAL1 markMCQQ.According to Companies Act, 2013, interest on calls-in-arrear will be charged at (A) 15% p.a. (B) 12% p.a. (C) 10% p.a. (D) 6% p.a.
›Reveal solutionSolution
Interest on calls-in-arrears is charged at 10% per annum — option (C).
When a shareholder does not pay the allotment or call money by the due date, the unpaid amount is termed calls-in-arrears. Under Table F of Schedule I to the Companies Act, 2013 (the model articles), the company may charge interest on calls-in-arrears at a rate not exceeding **1 …
- CBSE 2025Set ANNUAL1 markQ.Write entry for calls in Arrear.
›Reveal solutionSolution
Calls-in-Arrears entry: Calls-in-Arrears A/c Dr. To Share Call (Allotment/First/Final Call) A/c.
Calls-in-arrears is the portion of called-up capital that has been demanded from shareholders but not yet received. When the company wishes to record it separately, it debits the Calls-in-Arrears Account (an amount receivable) and credits the relevant unpaid call account:
Calls-in-Arrears A/c Dr. [unpaid amount]
** To Share Allotment / First Call / Final Call A/c**
…
- CBSE 2025Set ANNUAL1 markQ.What is it called when a shareholder fails to pay the call money on the due date?
›Reveal solutionSolution
The amount that a shareholder fails to pay on a call by its due date is called Calls-in-Arrears.
When a company calls for money on shares (allotment money, first call, second/final call, etc.) and a shareholder does not pay the amount due by the specified date, that unpaid amount is recorded in a separate account called "Calls-in-Arrears Account."
…
- CBSE 2025Set ANNUAL1 markQ.Give one point of difference between Calls in arrears and Calls paid in advance.
›Reveal solutionSolution
Calls-in-Arrears is money due FROM a shareholder; Calls-in-Advance is money received early FROM a shareholder, before it was due.
Calls-in-Arrears: when a shareholder fails to pay the allotment or call money on the due date, the unpaid amount is called Calls-in-Arrears. It is shown as a deduction from the called-up Share Capital in the Balance Sheet (Notes to Accounts), and the Articles of Association may permit the company to charge interest on calls-in-arrears from the defaulting shareholder (maximum 10% p.a. under Table F).
…
- CBSE 2024Set ANNUAL1 markMCQQ.Calls-in-arrear of a company is(a) an asset(b) a liability(c) an expense(d) an income
›Reveal solutionSolution
Calls-in-arrears is amount due from shareholders — an asset.
When a company makes a call, some shareholders may not pay on time. The unpaid called-up amount is calls-in-arrears.
- It is money the company still has a right to collect, so in nature it is a receivable (asset). …
- CBSE 2024Set ANNUAL1 markMCQQ.Interest rate on calls on arrears on shares must not exceed -(a) 10%(b) 5%(c) 6%(d) 12%
›Reveal solutionSolution
Correct option: (a) 10%.
When a shareholder fails to pay a call on the due date, the unpaid amount is calls-in-arrears, on which the company may charge interest. Under Table F of the Compani …
- CBSE 2024Set ANNUAL1 markMCQQ.The difference amount between called-up capital and ________ is referred to as Calls -in Arrears. (A) Capital Reserve (B) Issued Capital (C) Paid-up Capital (D) Reserve Capital
›Reveal solutionSolution
Calls-in-Arrears = Called-up Capital − Paid-up Capital.
Key share capital terms:
- Called-up Capital: the portion of the face value of shares that the company has demanded (called) from shareholders so far (through application, allotment, and call money).
- Paid-up Capital: the portion of the called-up capital that has actually been received/paid by the shareholders.
When some shareholders fail to pay money on calls made by the company, the unpaid amount is the difference between what was called and what was actually paid — this shortfall is called Calls-in-Arrears.
So: Calls-in-Arrears = Called-up Capital − Paid-up Capital
The other options do not fit: …
- CBSE 2024Set ANNUAL1 markMCQQ.The amount due on shares which has been called up by the company but has not been paid by the shareholders is(a) subscribed capital(b) nominal capital(c) reserve capital(d) calls-in-arrear
›Reveal solutionSolution
The amount called up but unpaid by a shareholder is "Calls-in-Arrear" (also called Unpaid Calls or Calls-in-Arrears).
A company rarely collects the full face value of a share in one instalment. It is collected in stages: on Application, on Allotment, and through one or more Calls (First Call, Second & Final Call, etc.). At any point in time, the amount the company has actually demanded ("called up") from shareholders may exceed what has actually been received.
- Subscribed capital is the part of the issued capital that has actually been subscribed (applied for and allotted) — not about non-payment.
- Nominal/Authorised capital is the maximum capital a company can raise as stated in its Memorandum — unrelated to non-payment. …
- CBSE 2024Set ANNUAL1 markMCQQ.Interest on calls paid in advance should not exceed ______.(a) 10 % p.a(b) 12 % p.a(c) 11 % p.a(d) 14 % p.a
›Reveal solutionSolution
A company may pay interest to a shareholder who pays up a call before it is actually due (calls-in-advance), but this interest rate is capped at 12% per annum unless the Articles of Association specify a lower rate.
Sometimes a shareholder pays, along with an application or allotment instalment, an amount towards a call that the company has not yet made. This excess amount is credited to a "Calls-in-Advance" account — it is a liability of the company (money received for shares not yet actually called), not share capital, until the corresponding call is actually made.
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