Question

Assertion (A): Calls in Arrears are deducted from Subscribed but not fully paid capital.

Reason (R): Calls in Advance are added to Subscribed but not fully paid Capital.

In the context of the above two statements, which of the following is correct?

Options

• Both (A) and (R) are correct and (R) is the correct reason of (A).

• Both (A) and (R) are correct but (R) is not the correct reason of (A).

• Only (A) is correct.

• Both (A) and (R) are wrong.

Answer 1

Only (A) is correct.

Explanation:

Assertion (A) is true, Calls in Arrears are shown as a deduction from Subscribed but not fully paid Capital in the balance sheet.

Reason (R) is false, Calls in Advance are not added to Subscribed Capital; they are shown separately under liabilities.