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:

Capital Projects Fund

A fund used by governmental entities to finance major capital outlays, such as buildings, infrastructure, and other significant projects.

Financial Statements

Comprehensive reports that provide information about an organization's financial position, performance, and changes in financial condition.

Enterprise Fund

A fund typically used by government entities to account for operations financed by fees and charges for services provided.

Fund Financial Statements

Financial reports that focus on the assets, liabilities, revenues, and expenses of governmental funds, proprietary funds, or fiduciary activities managed by a government or nonprofit organization.