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.

Question

Quizplus · Accepted Answer

The allotment and call accounts are in the nature of an account receivable as they represent amounts due from shareholders for shares allotted or calls made. These accounts are disclosed in the statement of financial position as a reduction against share capital, as they represent a part of the total amount of share capital that has been called but not yet paid by shareholders. Therefore, option C is the best choice.

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