Commerce and Business
BusinessFinancial AccountingFinancial Accounting and Reporting An International ApproachPractice Set 2490
BusinessFinancial AccountingFinancial Accounting and Reporting An International ApproachPractice Set 2490Share Capital, Reserves And Share Options Employee Bonus Schemes
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Questions Bank
- An Overview of the International External Reporting EnvironmentThe Conceptual Framework of Accounting and Its Relevance to Financial ReportingTheories of Financial AccountingAn Overview of Accounting for AssetsDepreciation of Property, Plant and EquipmentRevaluations and Impairment Testing of Non-Current AssetsInventoryAccounting for IntangiblesAn Overview of Accounting for LiabilitiesAccounting for LeasesShare Capital, Reserves and Share Options Employee Bonus SchemesAccounting for Financial InstrumentsRevenue Recognition IssuesThe Statement of Comprehensive Income and Statement of Changes in EquityAccounting for Income TaxesThe Statement of Cash FlowsEvents Occurring After the Reporting DateRelated-Party DisclosuresEarnings Per ShareFurther Consolidation Issues I: Accounting for Intragroup TransactionsFurther Consolidation Issues II: Accounting for Non-Controlling InterestsFurther Consolidation Issues III: Accounting for Indirect Ownership InterestAccounting for Foreign Currency TransactionsTranslating the Financial Statements of Foreign OperationsAccounting for Corporate Social Responsibility
Question 1
Free
True/False
As a residual interest,equity ranks after liabilities in terms of a claim against the assets of a reporting entity.
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False
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Question 2
Free
True/False
A share split is usually funded through retained earnings.
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True
False
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Question 3
Free
True/False
If an entity performs a share split on a partly paid share,the split must be done in such a way as to divide the uncalled portion equally among the shares issued.
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Question 4
Free
True/False
If a company is listed in the London Stock Exchange and shareholders fail to pay the amount due on allotment,the shares forfeited must be refunded in full to defaulting investors.
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True
False
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Question 5
Free
True/False
The owners' equity of an organisation is the same as the shareholders' funds of a company.
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False
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Question 6
True/False
An individual's views on measurement techniques for assets and liabilities will have a direct impact on the amount recorded in shareholders' funds.
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True
False
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Question 7
True/False
It used to be normal practice to issue shares at below par value.
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True
False
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Question 8
True/False
In a public issue of shares,the procedure to be adopted in the case of an oversubscription is normally specified in the prospectus.
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True
False
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Question 9
True/False
Ordinary shares receive low dividends because they do not perform very well.
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True
False
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Question 10
True/False
Company law usually requires that where a company redeems preference shares it must do so out of profits that would otherwise be available for dividends or out of the proceeds of a fresh issue of shares made for the purpose of the redemption.
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True
False
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Question 11
True/False
Where new investors are offered the opportunity to buy new shares this will have the effect of diluting the existing shareholders' interest in the company.
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True
False
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Question 12
True/False
IAS 1 Presentation of Financial Statements requires an entity to disclose a description of the nature and purpose of each reserve within equity.
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True
False
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Question 13
Multiple Choice
Double entry accounting requires that:
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the claims held by external parties equal the claims held by the owners.
the total assets of an entity equal the total of the claims held by external parties plus those claims held by the owners.
the liabilities of the entity equal its total assets plus the claims held by the owners.
the recognition of the claims held by owners will match the entity's total assets.
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Question 14
Multiple Choice
Share capital:
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relates to one class of shares, with the remaining equity recorded as reserves or retained profits.
represents the amount shareholders are guaranteed to receive if the company is wound up.
may relate to one or several classes of shares.
may be calculated by subtracting liabilities from assets.
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Question 15
Multiple Choice
Accounts that make up owners' equity may include:
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preference shares.
debentures.
general reserves.
preference shares and general reserves.
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Question 16
Multiple Choice
A company may elect to issues its shares at any price,which will depend on:
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the last sales price for the company's shares before the new issue.
the market demand.
the minimum price that has been paid for the shares over the last reporting period..
the amount specified in legislation at which all companies were required to issue shares.
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Question 17
Multiple Choice
A public issue of shares involves:
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compiling and then issuing a prospectus that outlines the details of the share issue so those interested can make an informed decision.
making the general public aware that shares are available for sale at a set price.
only issuing a limited number of shares to ensure there is sufficient demand for a full subscription.
issuing ordinary shares to all members of the public who are interested.
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Question 18
Multiple Choice
The process for issuing shares is that:
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They are offered for sale, allotments are received and an assignment made.Monies received on allotment must be held in trust until the assignment is made.
They are offered for sale, applications are received and an allotment made.Monies received on application must be held in trust until the allotment is made.
Applications are received for the issue of shares and an offer of shares is made.Applicants contribute capital that is returned to them if their application is unsuccessful when the shares are assigned.
A notice of intention to purchase shares is registered with the stock exchange, which the company receives.The company then offers shares.The applicant may then be allotted shares and at that point must make the cash contribution.
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Question 19
Multiple Choice
Flag Plc has received applications for 4 million shares during July 2014.The shares are to be issued at a price of £2.75 per share.The 4 million shares are allotted on 15 August 2014.What are the accounting entries required to record these events?
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Question 20
Multiple Choice
In the case of a share issue being oversubscribed,the common approaches include:
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Issue additional shares to meet the excess demand.
Allocate the shares on a pro rata basis.
Increase the issue price of the shares.
Issue additional shares to meet the excess demand and increase the issue price of the shares.
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