1.1.1There 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. 1.1.2Which one of the following would reduce the cash balances of a business and not reduce the profit for the year? Select one: a. Interest paid b. Distribution costs c. Remuneration to directors d. Dividends paid 1.1.3.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.

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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1.1.1There 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.

1.1.2Which one of the following would reduce the cash balances of a business and not reduce the profit for the year?

Select one:

a. Interest paid

b. Distribution costs

c. Remuneration to directors

d. Dividends paid

1.1.3.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.

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