Question

First call amount received in advance from the shareholders before it is actually called up by the directors is ______.

Options

• Debited to calls-in-advance account.

• Credited to share allotment account.

• Debited to first call account.

• Credited to calls-in-advance account.

Answer 1

First call amount received in advance from the shareholders before it is actually called up by the directors is Credited to calls-in-advance account.

Explanation:

When shareholders pay money before it is actually called, it is treated as Calls in Advance. This is a liability for the company until the call is actually made.
Hence, it is credited to Calls-in-Advance Account.