Accounting Multiple Choice Question – 6 August 2024

At the 30 June 2023 Alex plc had the following balances:

• Equity shares of £1 each £100M
• Share premium account £80M

During the year ended 30 June 2024, the following transactions took place:

• 1 September 2023: a 1 for 2 bonus issue of equity shares, using the share premium account.
• 1 January 2024: a 2 for 5 rights issue at £1.50 per share, taken up fully paid.

What are the balances on each account as at 30 June 2024?

Select ONE answer:

1. Share Capital £210M and Share Premium Account £110M
2. Share Capital £210M and Share Premium Account £60M
3. Share Capital £240M and Share Premium Account £30M
4. Share Capital £240M and Share Premium Account £80M

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. Notcorrect
2. Correct  –> Shareholders do not have an  automatic right to be a director or to be involved in management (3).  The partners’ individual shareholdings will be determined by an agreement that is not necessarily related to the existing partnership agreement (1). The concept of perpetual succession means that the company will not dissolve upon the death of a shareholder (4).
3. Not correct
4. Not correct

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