Answered: There are limitations

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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Question

Please assist by providing the correct answer for 1.1,1.2 and 1.3

1.1

There are limitations on the issuing and redemption of redeemable shares. Which ONE of the following is NOT an actual limitation?

Select one:

a. Redeemable shares cannot be issued if the only shares that the company has issued are redeemable shares.

b. Redeemable shares can only be redeemed if they are fully paid-up.

c. When redeeming shares, the company must pay fully for them at the time of redemption, unless the terms of redemption provide for a later date.

d. Private companies can only issue redeemable shares if authorised by their articles.

1.2

Identify the statement that is correct regarding the paid up capital.

Select one:

a. If any of the shareholders has not paid amount on calls, such an amount may be called as ‘calls in arrears’. Therefore, paid up capital is equal to the called-up capital plus call in arrears.

b. It is that portion of the called up capital which has been actually received from the shareholders. When the shareholders have paid the entire call amount, the called up capital is the same to the paid up capital

c. It is that portion of the uncalled up capital which has been actually received from the shareholders. When the shareholders have paid the entire call amount, the called up capital is the same to the paid up capital

d. If any of the shareholders has not paid amount on calls, such an amount may be called as ‘calls in arrears’. Therefore, paid up capital is equal to the called-up capital divided by call in arrears.

1.3

The balance of goods sent out on consignment will be transferred to:

Select one:

a. General P/L

b. General Trading

c. Balance Sheet

d. Capital A/c

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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