Accounting Multiple Choice Question – 29 August 2023

Alex plc’s capital reduction scheme is as follows.

• Reducing the £1.00 preference shares by 60%.
• Reducing the £1.00 ordinary shares to shares of £0.05

The statement of financial position of the company immediately before the approval of the scheme was:

• preference shares – £100,000
• ordinary shares – £400,000
• net assets – £500,000

What will be the issued share capital of Alex plc after the capital reduction?

Select ONE answer:

1. £20,000
2. £60,000
3. £80,000
4. £260,000

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 – £100k * 0.6 + £400k * 0.05
3. Not correct
4. Not correct

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