What is meant by Calls in Arrears?
Calls in Arrears refers to the amount not received from shareholders or allottees when they fail to pay the amount due on allotment or on any of the calls on the specified due date. These amounts are cumulatively known as Unpaid Calls.
From an accounting perspective, Calls in Arrears represents the debit balance of the calls account. It is not mandatory for a company to maintain a separate Calls-in-Arrears Account; however, if maintained, the amount is shown as a 'Note to Accounts'. The company has the power to charge interest on these arrears, and if the Articles of Association are silent, Table F applies, stipulating interest at a rate not exceeding 10% p.a. for the period between the day fixed for payment and the actual payment.
Explanation
The answer is derived directly from the provided textbook context which defines 'Calls in Arrears' as amounts not paid by shareholders on allotment or calls. The context highlights that it is also called 'Unpaid Calls' and represents a debit balance. It further explains the accounting treatment (Note to Accounts) and the provision for charging interest (Table F, max 10% p.a.) as per the text.