Question

Calls in-Arrears represents which kind of balance of all the calls account and are shown as deduction from the paid-up capital on the ______ side of the balance sheet.

Options

• Debit balance, Asset side

• Credit balance, liability side

• Debit balance, liability side

• Credit balance, Asset side

Answer 1

Debit balance, liability side

Explanation:

Calls in-Arrears represent the debit balance of all the calls account and are shown as a deduction from the paid-up capital on the liabilities side of the balance sheet. However, where a company maintains 'Calls-in-Arrears' Account, it needs to pass the following additional journal entry. However, it is not necessary to do so. Calls in Arrears A/c Dr. to Share I Call Account A/c to Share II and Final Call Account A/c (Calls in arrears brought into account).