Match each category of share capital with its correct description in financial accounting.
- Authorized Share CapitalThe maximum amount of capital a company is legally authorized to raise as stated in its Memorandum of Association.
- Issued Share CapitalThe portion of authorized capital that has been offered to the public for subscription.
- Called-Up Share CapitalThe portion of issued capital that the directors have requested shareholders to pay.
- Paid-Up Share CapitalThe actual amount of money received from shareholders out of the total amount requested.
Answer
Authorized Share Capital matches the maximum capital allowed by the Memorandum of Association; Issued Share Capital matches the portion offered to the public; Called-Up Share Capital matches the portion requested by directors; Paid-Up Share Capital matches the actual money received from shareholders.
Each share capital class denotes a distinct accounting stage: Authorized is registered ceiling, Issued is offered shares, Called-Up is demanded payment, and Paid-Up is actual cash collected.
Step-by-Step Solution
Key Concept
Classification of Share Capital
Estimated Time:1m 30s