WAEC SSCE - Financial Accounting - 1998 (Objective)

Question 1 Report

Payment for shares in excess of amount demanded gives rise to

dividend warrant

revenue reserve

capital reserve

call-in-advance

call-in-arrears

Answer Details

Payment for shares in excess of the amount demanded gives rise to "call-in-advance". When a company issues shares, it may demand a certain amount from shareholders as payment. However, in some cases, shareholders may voluntarily pay more than the demanded amount. The excess payment is called a "call-in-advance". It represents money paid by the shareholders in advance to the company for the shares they have bought. This excess payment can be refunded to the shareholders if the company decides to repay it, or it can be used by the company for its business operations. It is different from "call-in-arrears", which occurs when shareholders fail to pay the demanded amount for the shares they have bought.






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