Understanding the Issuing of Shares: Application, Allotment, and Calls

The video tutorial covers the process of issuing shares, focusing on the stages of application, allotment, and handling oversubscription and undersubscription. It explains the accounting entries required at each stage, including how to manage excess applications and refunds. The tutorial also addresses the handling of calls in advance and arrears, detailing the necessary journal entries and adjustments. Key concepts include the importance of meeting minimum subscription requirements and the methods for allotting shares, such as lottery and pro rata. The video emphasizes understanding the logic behind accounting entries and the double-entry system.

What are the main stages involved in the process of issuing shares?

• Prospectus, Application, Allotment, Calls

• Prospectus, Refund, Allotment, Calls

• Application, Prospectus, Refund, Calls

• Application, Allotment, Refund, Calls

What is the term used when a company receives more applications than the shares issued?

• Undersubscription

• Full Subscription

• Oversubscription

• Partial Subscription

What happens if a company receives applications for fewer shares than issued?

• The company proceeds with the issue

• The company refunds all the money

• The company issues more shares

• The company reduces the share price

Which method involves randomly selecting applications for share allotment?

• Shareholder Voting

• Lottery Method

• First Come First Serve

• Pro Rata Basis

How are shares allotted on a pro rata basis?

• All shares are allotted equally

• Shares are allotted in proportion to applications

• Shares are allotted based on shareholder preference

• Shares are allotted randomly

What is the journal entry when share applications are rejected?

• Debit Share Capital, Credit Bank

• Debit Bank, Credit Share Application

• Debit Share Application, Credit Bank

• Debit Share Capital, Credit Share Application

What happens to excess application amounts in a pro rata allotment?

• They are refunded immediately

• They are adjusted against future calls

• They are kept as a deposit

• They are used to buy more shares

What is the term for the amount not received when a call is due?

• Deferred Calls

• Calls in Arrears

• Pending Calls

• Calls in Advance

How is the entry made when calls are paid in advance?

• Debit Calls in Advance, Credit Bank

• Debit Calls in Advance, Credit Share Capital

• Debit Bank, Credit Calls in Advance

• Debit Share Capital, Credit Calls in Advance

What is the impact of interest on calls in arrears?

• It is charged to the shareholder

• It decreases the share capital

• It is refunded to the shareholder

• It increases the share capital