Day: May 22, 2020

A company issued ordinary shares at their nominal (par) value and received payment in full.

The effect of this on the company’s financial statements is . . .?

Select ONE answer:

1. the bank balance is increased and the figure shown in the balance sheet for ordinary share capital is increased.
2. the bank balance is decreased and the figure shown in the balance sheet for ordinary share capital is decreased.
3. the bank balance is increased and the figure shown in the balance sheet for ordinary share capital is decreased.
4. None of the above.

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 – Money has been received – so the bank balance is increased. Shares have been issued – so the company’s share capital has been increased.
2. Not correct
3. Not correct
4. Not correct

 

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