📢 Too many exams? Don’t know which one suits you best? Book Your Free Expert 👉 call Now!

    Question

    A company initiated the process of raising money by

    issue of equity shares. It received the share application money, but the allotment is pending. The money received will be recorded as _____ for the company.
    A Capital Correct Answer Incorrect Answer
    B Asset Correct Answer Incorrect Answer
    C Liability Correct Answer Incorrect Answer
    D Income Correct Answer Incorrect Answer
    E Expense Correct Answer Incorrect Answer

    Solution

    Share application money pending allotment is a liability which is shown as a separate item in the balance sheet. It is a liability since the company is liable to either allot shares against that money or refund it. Any application money received for allotment of securities and due for refund is shown under other current liabilities.

    Practice Next
    More Basic Accounting Concepts Questions
    ask-question