Month: February 2021

What type of capital must all limited companies have?

Select ONE answer:

1. convertible loan stock
2. debentures
3. ordinary shares
4. preference shares

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. Correct
4. Not correct

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

A company converts £2,000,000 debenture stock into £0.50 ordinary shares.

The conversion rate is 40 ordinary shares per £100 debenture stock.

What amount is credited to the Share Premium account?

Select ONE answer:

1. £800,000
2. £1,000,000
3. £1,200,000
4. £1,600,000

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 4

1. Not correct
2. Not correct
3. Not correct
4. Correct – £2,000,000 / £100 = 20,000 * 40 = 800,000 / 2 = £400,000 ==> £2M – £0.4M = £1.6M Premium

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

What is an advantage of using pay back method of capital investment appraisal? 

Select ONE answer:

1. calculates higher purchase instalments
2. calculates profitability
3. determines the efficiency of a process
4. evaluates risk

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.