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Calls in arrear A/C is nominal nature or personal nature A/c ?
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Calls in arrear A/C is nominal nature or personal nature A/c ?
Calls-in-Arrears : If any amount has been called by the company either as allotment or call money and a shareholder has not paid the money, such amount not received is known as calls-in- arrears.
Rate of Interest : The company is authorised to charge interest on the Calls-in-Arrears at a rate specified in the Articles of Association from the last date fixed for payment to the date of payment. But if the Articles of Association are silent Table A shall apply, which empowers the Board of Directors to charge interest at a rate not exceeding 5% per annum.
Disclosure in Balance Sheet : The amount of the Calls-in-Arrears is shown by way of deduction from the called-up capital in the Balance Sheet. Accounting Treatment of Calls-in-Arrears
There are two methods of dealing with the Calls-in-Arrears :
1 Without Opening the Calls-in-Arrears Account : Under this method, there is no need to pass any Journal entry for the Calls-in-Arrears because the difference between the entry of the call money due and call money received will clearly indicate the amount of the Calls-in-Arrears.
2. By Opening the Calls-in-Arrears Account : The alternative method to treat the Calls-in-Arrears is by opening a 'Calls-in Arrears Account'. If the amount of calls has not been paid by some shareholders, the Calls-in-Arrears Account is debited. In this case, allotment and other call accounts will not show any balance but the Calls-in-Arrears Account will show a debit balance equal to the total unpaid on various instalments. If later on any amount is received, it is credited to the Calls-in-Arrears Account.
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Calls in arrear A/C is nominal nature or personal nature A/c ?
Introduction:
Calls in arrear refer to the unpaid amount of money that shareholders owe to a company for the shares they have subscribed to but not yet fully paid for. These calls are made by companies to collect the remaining amount due from shareholders. When analyzing whether calls in arrear accounts are of nominal nature or personal nature, it is important to understand the nature of these accounts and their treatment in accounting.
Calls in Arrear Account:
Calls in arrear accounts are created by companies to record the amounts due from shareholders. These accounts are maintained until the shareholders make the required payments, at which point the amounts are transferred to the share capital account. The calls in arrear account represents a liability for the shareholders until the full payment is made.
Nominal Nature Account:
Nominal accounts are used to record income, expenses, gains, and losses incurred by a company. They are temporary accounts that are closed at the end of an accounting period. Examples of nominal accounts include sales revenue, rent expense, and interest income. These accounts do not represent a financial obligation or a personal relationship between the company and its stakeholders.
Personal Nature Account:
Personal accounts are used to record transactions related to individuals, companies, or organizations with whom a company has a direct financial relationship. These accounts represent a personal obligation or a personal relationship between the company and its stakeholders. Examples of personal accounts include accounts receivable, accounts payable, and capital accounts.
Calls in Arrear Account Classification:
Calls in arrear accounts can be classified as personal nature accounts. This is because they represent a direct financial relationship between the company and its shareholders. The calls in arrear account records the outstanding amounts owed by shareholders, which is a personal liability for them until the full payment is made. Once the payment is received, the personal liability is settled, and the amount is transferred to the share capital account.
Conclusion:
In conclusion, calls in arrear accounts are classified as personal nature accounts. They represent the outstanding amounts owed by shareholders to the company until the full payment is made. Unlike nominal accounts, personal accounts involve a direct financial relationship between the company and its stakeholders. By understanding the nature of these accounts, companies can appropriately record and manage the calls in arrear amounts.
Calls in arrear refer to the unpaid amount of money that shareholders owe to a company for the shares they have subscribed to but not yet fully paid for. These calls are made by companies to collect the remaining amount due from shareholders. When analyzing whether calls in arrear accounts are of nominal nature or personal nature, it is important to understand the nature of these accounts and their treatment in accounting.
Calls in Arrear Account:
Calls in arrear accounts are created by companies to record the amounts due from shareholders. These accounts are maintained until the shareholders make the required payments, at which point the amounts are transferred to the share capital account. The calls in arrear account represents a liability for the shareholders until the full payment is made.
Nominal Nature Account:
Nominal accounts are used to record income, expenses, gains, and losses incurred by a company. They are temporary accounts that are closed at the end of an accounting period. Examples of nominal accounts include sales revenue, rent expense, and interest income. These accounts do not represent a financial obligation or a personal relationship between the company and its stakeholders.
Personal Nature Account:
Personal accounts are used to record transactions related to individuals, companies, or organizations with whom a company has a direct financial relationship. These accounts represent a personal obligation or a personal relationship between the company and its stakeholders. Examples of personal accounts include accounts receivable, accounts payable, and capital accounts.
Calls in Arrear Account Classification:
Calls in arrear accounts can be classified as personal nature accounts. This is because they represent a direct financial relationship between the company and its shareholders. The calls in arrear account records the outstanding amounts owed by shareholders, which is a personal liability for them until the full payment is made. Once the payment is received, the personal liability is settled, and the amount is transferred to the share capital account.
Conclusion:
In conclusion, calls in arrear accounts are classified as personal nature accounts. They represent the outstanding amounts owed by shareholders to the company until the full payment is made. Unlike nominal accounts, personal accounts involve a direct financial relationship between the company and its stakeholders. By understanding the nature of these accounts, companies can appropriately record and manage the calls in arrear amounts.
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Calls in arrear A/C is nominal nature or personal nature A/c ?
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Calls in arrear A/C is nominal nature or personal nature A/c ? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Calls in arrear A/C is nominal nature or personal nature A/c ? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Calls in arrear A/C is nominal nature or personal nature A/c ?.
Calls in arrear A/C is nominal nature or personal nature A/c ? for Commerce 2025 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Calls in arrear A/C is nominal nature or personal nature A/c ? covers all topics & solutions for Commerce 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Calls in arrear A/C is nominal nature or personal nature A/c ?.
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