Question

Select the most appropriate answer from the alternatives given below and rewrite the sentence :
Interest on Calls-in-arrears is ______________for the company.

Options

• income

• expenditure

• gain

• loss

Answer 1

Interest on Calls-in-arrears is income for the company.

Explanation: When the shareholders do not pay the called-up amount on the shares, it is known as calls-in-arrears. The shareholders are required to pay the interest on such calls-in-arrears till it remains unpaid. It is in the nature of income for a company and hence, it is credited. The rate of interest charged by a company on calls-in-arrears is 5 % p.a.