Day: August 28, 2023

Accounting Multiple Choice Question – 28 August 2023

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

Photo by Olya Kobruseva on Pexels.com

The capital structure of Alex plc is:

  • £1 ordinary shares – £40,000
  • convertible loan shares – £20,000
  • share premium – £10,000

The loan share conversion is made on the basis of 1 new ordinary share for every £4 of convertible shares held.

What is the capital structure of Alex plc after the conversion?

Select ONE answer:

  1. ordinary shares £40,000 & share premium £30,000
  2. ordinary shares £45,000 & share premium £25,000
  3. ordinary shares £50,000 & share premium £20,000
  4. ordinary shares £60,000 & share premium £10,000

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 2

  1. Not correct
  2. Correct – new ordinary shares £20,000 / 4 = £5,000 & share premium now £10k + £20k – £5k
  3. Not correct
  4. Not correct

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