Tag: rights issue

Accounting Multiple Choice Question – 6 August 2024

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

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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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Accounting Multiple Choice Question – 5 August 2024

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

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Which of the following may appear as current liabilities ni a company’s statement of financial position?

1.Loan due for repayment within 1 year

2.Taxation

3.Warranty provision

Select ONE answer:

  1. 1 and 2 and 3
  2. 1 and 2 only
  3. 1 and 3 only
  4. 2 and 3 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 1

  1. Correct
  2. Not correct
  3. Not correct
  4. Not correct

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Accounting Multiple Choice Question – 4 August 2024

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

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Alex Ltd’s share capital consists of 20,000 times 25p equity shares all of which were issued at a premium of 20%.

The market value of the shares is currently 70p each.

What is the balance on the company’s equity share capital account?

Select ONE answer:

  1. £5,000
  2. £6,000
  3. £14,000
  4. £24,000

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 1

  1. Correct – 20,000 shares * 25p = £5k
  2. Not correct
  3. Not correct
  4. Not correct

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Accounting Multiple Choice Question – 11 October 2023

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

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Alex Trading plc, with an existing issued share capital of 200,000 shares of £0.50 made a one for four bonus issue.

This was later followed by a one for two rights issue at £1.20 per share.

What will be the balance on the share capital account after these transactions?

Select ONE answer:

  1. £125,000
  2. £187,500
  3. £270,000
  4. £375,000

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 == > 200,000 * £0.5 = £100k + (200,000 / 4 * £0.50) = £125k * 1.5 = £187,500
  3. Not correct
  4. Not correct

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Accounting Multiple Choice Question – 13 August 2023

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

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Alex plc’s capital is made up as follows:

  • ordinary shares of £1.00 each – £200,000
  • share premium account – £80,000
  • Retained profits – £160,000

Changes now to be made (in the order given):

  • A one for one bonus issue
  • A rights issue of 100 000 ordinary shares of £1.00 each at £1.40 per share

The company wishes to maximise the amounts available to pay dividends.

What will be the ordinary capital and reserves of the company?

Select ONE answer:

  1. ordinary share capital £500,000 and share premium £40,000 and Retained profits £40,000
  2. ordinary share capital £500,000 and share premium £80,000 and Retained profits £NIL
  3. ordinary share capital £540,000 and share premium £NIL and Retained profits £40,000
  4. ordinary share capital £540,000 and share premium £40,000 and Retained profits £40,000

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 1

  1. Correct – a. Dr Share Premium Account £80,000 Dr Retained profits £120,000 Cr Share Capital £200,000 PLUS b. Dr Cash £140,000 Cr Share Capital £100,000 Cr Share Premium £40,000
  2. Not correct
  3. Not correct
  4. Not correct

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