Month: February 2021

A company has an authorised share capital of 1.5 m ordinary shares at £1.00 each.

One million shares have been issued and have a market value of £4.50 per share. The directors are proposing a dividend of £0.10 per share for the year.

The year-end results are as follows:

• profits before tax  —  £180,000
• taxation  —  (£40,000)
• profits after tax  — £140,000 

What is the dividend cover?

Select ONE answer:

1. 0.9 times
2. 1.2 times
3. 1.4 times
4. 1.8 times 

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 3

1. Not correct
2. Not correct
3. Correct – 1,000,000 * £0.10 = £100k ==> £140k / £100k = 1.4
4. Not correct

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A company’s convertible loan stock will be converted to ordinary shares on 1 January 2025.

The company that has issued the convertible loan stock should show it in its Balance Sheet at 31 December 2020 as?

Select ONE answer:

1. authorised capital.
2. creditors: amounts falling due after more than one year.
3. creditors: amounts falling due within one year.
4. issued share capital.

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 2

1. Not correct
2. Correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

Accounting Standards require a statement of total recognised gains and losses to be reported.

Which item, arising during the year, will be included in the statement?

Select ONE answer:

1. dividend payable
2. Goodwill written off to reserves
3. premium on shares issued
4. prior year adjustment

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 4

1. Not correct
2. Not correct
3. Not correct
4. Correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

Which of the following is NOT required to be disclosed in published company accounts?

Select ONE answer:

1. accounting policies
2. auditors’ fees
3. directors’ remuneration
4. rent paid for premises

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 4

1. Not correct
2. Not correct
3. Not correct
4. Correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

Which item is NOT required in the Report of Directors of a limited company?

Select ONE answer:

1. details of export sales
2. future developments for the business
3. the names of the directors
4. the proposed dividend details

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
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.