
The amount of the issued share capital of a company is. . . ?
Select ONE answer:
- always equal to the amount of its authorised share capital.
- equal to the amount of its issued preference share capital.
- equal to the reserves of the company.
- None of the above.
Show your workings to arrive at your answer, and explain and justify your reasons:
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This multiple-choice question is suitable for Accounting KS5 classes.
The answer is 4
- Not correct – The amount of the issued share capital of a company may be less than, or equal to, the company’s authorised share capital.
- Not correct – The total issued share capital of a company cannot equal its issued preference share capital, because every company must have at least two ordinary shares.
- Not correct – There is no relationship between the amount of the issued share capital of a company and its reserves.
- Correct – The issued share capital of a company is the total amount of share capital, both ordinary share capital and preference share capital, which it has actually sold to shareholders.
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