When Shares Are Allotted,or a Call Made on Them,allotment and Call

question 66

Multiple Choice

When shares are allotted,or a call made on them,allotment and call accounts are created respectively.What is the nature of these accounts and how are they to be disclosed in the financial statements?

• A) The accounts are similar in nature to an account receivable and are to be disclosed in the statement of financial position as a current asset.
• B) The accounts are similar to a future income benefit and are to be separately disclosed as assets in the statement of financial position.
• C) The accounts are similar to an account receivable and are disclosed in the statement of financial position as a reduction against share capital.
• D) The accounts are in the nature of a deferred income and are disclosed as a provision for future cash inflows in the statement of financial position.

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Definitions:

Bylaws

Rules and regulations adopted by an organization or community for its internal governance.

Internal Management

The process and practice of administering, managing, and directing an organization's internal operations and resources.

Intermediate Position

A stance or level that falls between two extremes or primary positions, often used to describe job levels or decision-making stages.

Irrevocable

Unable to be changed, revoked, or undone; permanent.