Capital – meaning, types and structure II

Back to: COMMERCE SS2

 

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In today’s Commerce class, We will continue learning about Business Capital. We hope you enjoy the class!

 

 

1. Called-up capital: This is the part of the issued capital that shareholders have been required to pay up to date. E.g. A company which has issued shares of =N=115,000 out of the normal capital of =N= 200,000 may require shareholders to pay =N= 0.60 for the time being out of the =N=1 due on each share. In this case, the called-up capital will be =N=90,000 and the remaining =N=60,000 will be the uncalled capital
2. Paid-up capital: This is the part of the called up capital which shareholders have actually paid for. It refers to the sum actually received in cash by the company when it called on the shareholders to pay E.g. out of the =N=90,000 called up, what was actually paid up by (or received from) shareholders might be =N=87,000.
3. Uncalled capital: This is the total amount that has not been called upon the issued capital. It refers to the balance between the called up capital and the issued capital. This may be called on later when more capital is required.
4. Call in arrears: this is the difference between the called up capital and the paid-up capital. It represents part of the Called-up capital which is yet to be paid by the shareholders after the call for payment has been made.
5. Calls paid in Advance: This is the money received in advance of calls i.e. the sum the company receives before calls are made for payment.

 

REVIEW QUESTIONS

1. Outline six kinds of share and loan capital utilized by public limited liability companies.
2. Explain how a public limited company may increase capital employed.

(a) temporarily       (b) permanently

 

READING ASSIGNMENT

Essential Commerce for SSS by O.A Longe page 187-196.

 

THEORY

1. State any four sources of capital for a public limited liability company.
2. List three importance of working capital to a business.

 

GENERAL EVALUATION QUESTIONS

1. List five advantages of using a cheque as a means of payment
2. State seven differences between hire purchase and deferred payment
3. Explain five reasons for winding up a public limited company
4. Give seven features of public enterprises
5. Give five reasons why a life assurance policy may be taken

 

 

 

We have come to the end of this class. We do hope you enjoyed the class?

Should you have any further question, feel free to ask in the comment section below and trust us to respond as soon as possible.

In our next class, we will be learning about Business Profit. We are very much eager to meet you there.

 

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