Accounting Multiple Choice Question – 16 January 2021

The issued share capital of PQR Ltd. is:

1. 500,000 6 % preference shares of £1.00 each fully paid
2. 3,000,000 ordinary shares of £0.50 each fully paid

The company also has a long-term liability consisting of £200,000 of 7.5 % debentures, which were issued some years ago.

The company’s operating profit is £285,000.

What will be the dividend per ordinary share?

Select ONE answer:

1. £0.04
2. £0.0425
3. £0.045
4. £0.475

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 – (£500k * 0.06) + (£200k * 0.075) = £45k ===> £285 – £45k = £240k / 6,000k shares ===> £0.04
2. Not correct
3. Not correct
4. Not correct

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