Question

Assertion (A): Calls not yet made by the company but received in advance is shown as Paid-up Capital.

Reason (R): Calls not made but received are shown as Other Current Liabilities under Current liabilities.

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

Options

• Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A).

• Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).

• Assertion (A) is false but Reason (R) is true.

• Both Assertion (A) and Reason (R) are false.

Answer 1

Assertion (A) is false but Reason (R) is true.

Explanation:

Money received for calls not yet made is called Calls-in-Advance and does not form part of Paid-up Capital. It is shown as a liability until the relevant call becomes due.