Which of the following types of businesses can a limited company be?
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D. All of the above A limited company can be a trading, service, manufacturing business, or a combination of these.
What is one advantage of operating as a limited company?
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B. Limited liability One advantage of operating as a limited company is limited liability, which means the liability of the shareholders is limited to the amount they have invested in the company.
What does the term 'limited liability' mean?
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B. The shareholders' liability is limited to the amount they have invested in the company The term 'limited liability' means that the shareholders' liability is limited to the amount they have invested in the company. They are not responsible for the debts of the company beyond this amount.
Which of the following is NOT a component of the capital structure of a limited company?
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E. Shareholder loans The capital structure of a limited company comprises preference share capital, ordinary share capital, general reserve, and retained earnings. Shareholder loans are not a component of the capital structure.
Which of the following is a feature of ordinary share capital?
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D. Voting rights and variable dividends Ordinary share capital typically has voting rights and variable dividends, which means that the dividends paid to ordinary shareholders can vary depending on the profits of the company.
What is the difference between issued, called-up, and paid-up share capital?
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A. Issued capital is the total amount of capital that the company is authorised to issue, called-up capital is the amount that has been called for payment, and paid-up capital is the amount that has been paid by the shareholders Issued capital is the total amount of capital that the company is authorised to issue, called-up capital is the amount that has been called for payment, and paid-up capital is the amount that has been paid by the shareholders.
Which of the following financial statements is prepared by a limited company?
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D. All of the above A limited company prepares a statement of profit or loss, a statement of changes in equity, and a statement of financial position.
Which of the following adjustments would be made to the financial statements of a limited company?
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D. All of the above The financial statements of a limited company would be adjusted for accumulated depreciation, accrued and prepaid expenses and income, and irrecoverable debts and allowance for irrecoverable debts.
What is the purpose of a statement of profit or loss?
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B. To show the income and expenses of the business for a specific period of time The purpose of a statement of profit or loss is to show the income and expenses of the business for a specific period of time.
What is the purpose of a statement of financial position?
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B. To record the assets and liabilities of the business on a specified date The purpose of a statement of financial position is to record the assets and liabilities of the business on a specified date.
What is the purpose of a statement of changes in equity?
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C. To show the changes in the equity of the business over a specific period of time The purpose of a statement of changes in equity is to show the changes in the equity of the business over a specific period of time.
Which of the following is a feature of loan capital (debentures)?
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B. No voting rights Loan capital, such as debentures, typically has no voting rights and a fixed rate of interest. The interest is usually paid before any dividends are paid to shareholders, and the capital is repaid on a specified date.
What is the difference between preference share capital and ordinary share capital?
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A. Preference share capital has priority in the payment of dividends and capital, while ordinary share capital has voting rights and variable dividends Preference share capital has priority in the payment of dividends and capital, while ordinary share capital has voting rights and variable dividends.
What is the difference between a general reserve and retained earnings?
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A. A general reserve is a provision for future losses, while retained earnings are the profits of the company that have not been distributed as dividends A general reserve is a provision for future losses, while retained earnings are the profits of the company that have not been distributed as dividends.
Which of the following is an example of a limited company?
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C. A public limited company (PLC) and D. A private limited company (Ltd) Both a public limited company (PLC) and a private limited company (Ltd) are examples of limited companies. A PLC can sell shares to the public and has a minimum issued share capital of £50,000, while a Ltd company cannot sell shares to the public and has no minimum issued share capital.