Tag: Topic 7

At the 1 July 2023, the capital structure of Alex ltd was as follows:

• 200,000 equity ordinary shares of 25p each £50,000
• Share premium account £75,000

In the year ended 30 June 2024 the company made the following changes to their capital structure:

30 April 2024 – 1 for 5 rights issue at £1.25 per share and this was taken up in full.

What was the company’s capital structure in terms of share premium as at 30 June 2024 following the rights issue?

Select ONE answer:

1. £35,000
2. £75,000
3. £85,000
4. £115,000

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 4

1. Not correct
2. Not correct
3. Not correct
4. Correct – 200,000/5 = 40,000 shares.  Balance on share premium account thus becomes £75,000 + (40,000 x £1) = £115,000

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At the 1 July 2023, the capital structure of Alex plc was as follows:

1,000,000 equity ordinary shares of 50p each £500,000
Share premium account £400,000

In the year ended 30 June 2024 the company made the following changes to their capital structure:

• 1 January 2024 – 1 for 4 bonus issue.
• 30 April 2024 – 1 for 10 rights issue at £1.50 per share and this was taken up in full.

What was the company’s capital structure in terms of share capital and share premium as at 30 June 2024?

Select ONE answer:

1. Equity Share Capital £687.5k and Share Premium Account £650k
2. Equity Share Capital £675k and Share Premium Account £375k
3. Equity Share Capital £687.5k and Share Premium Account £150k
4. Equity Share Capital £687.5k and Share Premium Account £400k

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 4

1. Not correct
2. Not correct
3. Not correct
4. Correct – Shares at start of year = 1M, add Bonus issue 250k shares and then rights issue 125k shares for a total of 1,375k shares. Capital is £500k + Bonus issue £125k + Rights issue £62.5k for a total of £687.5k then Share Premium is £400k – Bonus issue £125k + Rights issue £125k for a total of £400k

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

For the two statements below:

1. A material profit or loss on the sale of part of the entity must appear in the income statement as an extraordinary item.
2. Dividends should be included in the income statement.

Decide whether they are true or false?

Select ONE answer:

1. Statement 1 – True, Statement 2 – True
2. Statement 1 – True, Statement 2 – False
3. Statement 1 – False, Statement 2 – True
4. Statement 1 – False, Statement 2 – False

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 4

1. Not correct
2. Not correct
3. Not correct
4. Correct – Extraordinary items are prohibited. Dividends appear in the statement of retained earnings not the income statement

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