CUET Accountancy 2023 - 20 June 2023 (Shift 2) Question Paper with Solutions

# Q1 of 50

When a company reserves a portion of its uncalled capital to be called in the event of winding up, such uncalled capital is known as:-

Options
A.

Reserve capital

B.

Capital Reserve


C.

Called up Capital

D.

Subscribed Capital

Show Answer
Correct Answer
D

Subscribed Capital

Solution

The correct option is Subscribed Capital.

Here is a step-by-step breakdown of why this option is correct:
1. Understanding Subscribed Capital: Subscribed capital is the portion of a company's authorized share capital that has been taken up or agreed to be purchased by the shareholders. It represents the total commitment made by the investors to the company.
2. Components of Subscribed Capital: Subscribed capital is divided into two primary categories based on whether the company has demanded payment:
- Called-up Capital: The portion that shareholders have already been asked to pay.
- Uncalled Capital: The portion that shareholders have agreed to pay but have not yet been asked to contribute.
3. The Link to the Reserve: When a company decides to reserve a portion of its uncalled capital to be called up only in the event of winding up (liquidation), this reserved amount is a designated sub-type of the uncalled capital. Because uncalled capital is fundamentally a component of the broader Subscribed Capital, this reserved portion remains a part of the company's overall subscribed capital structure.

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