Accounting Multiple Choice Question – 9 May 2020

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

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A company has the following capital structure:

Authorised       Issued

25p 4% Preference shares          £400,000            £100,000
£2 Ordinary shares                      £500,000            £200,000

If the company declares a dividend of 10p per ordinary share, the total dividend payable by the company will be?

Select ONE answer:

  1.  £14,000
  2. £26,000
  3. £54,000
  4. £66,000

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

  1. Correct – Preference dividend = £100,000 * 4% = £4,000 + Ordinary dividend = 100,000 shares * 10p each = £10,000.  Therefore, (100,000 shares = £200,000 / £2 nominal (par) value) = £14,000
  2. Not correct
  3. Not correct
  4. Not correct

 

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