1. Many businesses are set up as limited companies. These are owned by shareholders and run by the board of directors. Which of the following are disadvantages of limited company status?a) The impression of a soundly based business organisation (though incorporation does not guarantee reliability or respectability)b) Easier to raise capitalc) Must comply with legal and regulatory requirementsd) Shareholders’ liability for any losses is limited to the amount of their investmentin the company1.1 A loan repayment to a bank would be recorded in the nominal ledger as:a) Dr Bank Cr Capital b) Dr Loan Cr Bankc) Dr Loan Cr Bankd) Dr Bank Cr Reserves

Limited company means company limited by shares.

Answered: Many businesses are set up as limited…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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1. Many businesses are set up as limited companies. These are owned by shareholders and run by the board of directors. Which of the following are disadvantages of limited company status?

a) The impression of a soundly based business organisation (though incorporation does not guarantee reliability or respectability)
b) Easier to raise capital
c) Must comply with legal and regulatory requirements
d) Shareholders’ liability for any losses is limited to the amount of their investment

in the company

1.1 A loan repayment to a bank would be recorded in the nominal ledger as:

a) Dr Bank Cr Capital
b) Dr Loan Cr Bank
c) Dr Loan Cr Bank
d) Dr Bank Cr Reserves

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