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Accounting is a systematic process of recording, summarizing, analyzing and reporting all business transactions of a firm.

 

Authorized share capital refers to the total share capital which a joint stock company is authorized to accept from its investors. A company cannot raise capital more than what it is authorized. The amount of authorized share capital can be found in memorandum of association (MOA) and articles of association (AOA) of a company.

It is the capital with which a company gets registered that’s why it is also known as registered capital.

Example of authorized share capital:

Lets assume that ABC ltd. got registered with a capital of Rs 1,00,00,000 (1 crore) divided into shares of Rs 10 each. The management decides to issue 8,00,000 (8 lakh) shares to raise fund of Rs 80,00,000 (80 lakh). The investors subscribe only for 6,00,000 (6 lakh) shares. Now the company calls for Rs 4 per share out of Rs 10 (Nominal value of shares) and it gets the full amount for only 5,50,000 (5 lakh 50 thousand) shares.

Then,

Authorized share capital = Rs 1 crore (10 lakh shares of Rs 10 each)

Bonds are instrument of indebtedness of the issuer (Usually corporate or governmental agencies) to the holder (creditors). Put it simple, Bond is a promise made by issuer to repay the amount of principal and interest on a specified date known as maturity date.

These are considered as long term sources of raising fund as maturity period for most of the bonds, remains more than 1 years. A fixed rate of interest called ‘coupon’ is paid on these instruments.

Bonds are commonly referred as fixed income securities as they yield a fixed income in form of interest. However, some bonds do not pay interest instead they are issued at a price lower than par value and redeemed at par. So the difference between issued price and par value becomes the interest for these types of bond.

Most of the bonds are freely traded in stock markets while some are traded only Over The Counter OTC.

Book keeping is an art of recording all the business transactions.

 

When a company calls for an unpaid amount of shares it has issued and an investor fails to pay the amount fully or partially, then it is known as call in arrears. In simple words, it refers to the amount of difference between called up capital and paid up capital.

Call in arrears = Called up share capital – paid up share capital

In case of a company where there is no difference between the amount of called up share capital and paid up share capital, call in arrears will be zero. Although it seems impractical in real world but for some companies it may not be impossible because of their goodwill.

It is also known as unpaid call.

Read more about: Different types of share capital

Example of call in arrears:

Suppose ABC ltd. registered with a capital of INR 1,00,00,000 (1 crore) divided in share of INR 10 each. It issued 8,00,000 (8 lakh) shares to raise a fund of INR 80,00,000 (80 lakh) and the investors subscribed only for 6,00,000 (6 lakh) shares. The company called for INR 4 per share out of INR 10 (Nominal value of shares) and it got full amount for only 5,50,000 (5 lakh 50 thousand) shares.

Authorized share capital	1 crore
Issued share capital (800000 x 10)	80 lakh
Subscribed share capital (600000 x 10)	Rs 60 lakh
Called up share capital (600000 x 4)	Rs 24 lakh
Paid up share capital (550000 x 4)	Rs 22 lakh
Call in arrears (50000 x 4)	Rs 2 lakh