Business Studies · Company Capital
Statement 1: The authorized capital represents the maximum amount of share capital that a company is legally permitted to issue. Statement 2: Issued capital is that portion of the authorized capital which the company has actually offered for subscription. Statement 3: Subscribed capital refers to that part of the issued capital for which the company has received applications and has allotted. Statement 4: A company may issue bonus shares to its existing members by capitalizing its reserves. Which option accurately summarizes these statements?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Only Statement 1 and Statement 2 are logically connected to the legal definition of capital.
- 2Statements 1, 2, and 3 provide the hierarchy of capital, while Statement 4 explains the mechanism of increasing the base without cash inflow.✓
- 3Only Statement 3 is relevant for banking employees when evaluating creditworthiness.
- 4All statements are incorrect regarding corporate limitations.
Correct answer
Statements 1, 2, and 3 provide the hierarchy of capital, while Statement 4 explains the mechanism of increasing the base without cash inflow.
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