Answer to Question #53103 in Accounting for Godvictor

Question

Explain the following terms using a suitable illustration
i. Subscription in arrears
ii. Issued share capital
iii. Capital expenditure

Answer 1

i. In general, the term arrears means that something is late in being paid. For example, a debt payment could be in arrears, as could an account payable to a supplier, or a bond or interest payment to investors. In all of these cases, a company may enter into negotiations to revise the underlying debt agreement, either to reduce the amount or prolong the term of the payment.
ii. The total of a company’s shares that are held by shareholders. A company can, at any time, issue new shares up to the full amount of authorized share capital. Also called subscribed capital, or subscribed share capital.
iii. Capital expenditures (CAPEX or capex) are expenditures altering the future of the business. A capital expenditure is incurred when a business spends money either to buy fixed assets or to add to the value of an existing fixed asset with a useful life extending beyond the taxable year.