Day: December 6, 2021

A company makes a 1 for 4 bonus issue of ordinary shares.

What will happen to share capital and shareholders funds?

Select ONE answer:

1. Share capital increased by 25% & shareholders funds decreased by 25%
2. Share capital increased by 25% & shareholders funds increased by 25%
3. Share capital increased by 25% & shareholders funds increased by 0%
4. Share capital increased by 0% & shareholders funds increased by 25%

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
4. Not correct

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