Month: February 2025

Keith is a financial consultant and has made the following statements about finance leases to his clients in newsletter:

• Statement 1 The lessor is responsible for maintenance of the asset
• Statement 2 The agreement may split the lease term into a primary period and a secondary period
• Statement 3 The capital value of the asset must be shown on the lessee’s statement of financial position
• Statement 4 The leasing company is normally a bank or finance house

Which of these statements are true?

Select ONE answer:

1. Statements 1, 2 and 3 only
2. Statements 2, 3 and 4 only
3. Statements 1, 2 and 4 only
4. Statements 1, 3 and 4 only

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 == > Under a finance lease, the risks and rewards of ownership are transferred to the lessee, who will therefore normally be responsible for maintenance.
3. Not correct
4. Not correct

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

Which of the following is an advantage to shareholders of a company that is obtaining a quotation on the London Stock Exchange?

Select ONE answer:

1. Disclosure requirements are reduced
2. Larger dividends can be paid
3. Shares become more readily marketable
4. The company becomes entitled to put ‘plc’ (that is, public limited company) after its name

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 == > Shares become more readily marketable when they are quoted. Not all public limited companies are quoted companies, and all quoted companies face increased disclosure requirements, not reduced ones, compared to an unquoted plc let alone a Ltd company. The size of dividend does not depend on whether a company is quoted.
4. Not correct

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

Alex plc wants to be listed on the London Stock Exchange.

Ken, their adviser has stated that the following are methods by which a company can obtain a new London Stock Exchange quotation for its shares:

Method 1 Offer for sale
Method 2 Placing
Method 3 Rights issue
Method 4 Offer for subscription

Which of these methods are actually available to Alex plc?

Select ONE answer:

1. Methods 1, 2 and 3 only
2. Methods 2, 3 and 4 only
3. Methods 1, 2 and 4 only
4. Methods 1, 3 and 4 only

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 == > A rights issue is the only one of these methods which cannot be used to obtain a new stock exchange listing.
4. Not correct

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