Company Accounts

Which of the following documents contains the rules or by-laws which govern the internal working of a company?

• Companies Act

• Companies Trust Deed

• Articles of Association

• Memorandum of Association

The maximum amount of capital stated in the Memorandum of Association of a limited company that can be issued to the public is the ________.

• Called-up Share Capital

• Authorised Share Capital

• Issued Share Capital

• Paid-Up Share Capital

Which of the following is part of the issued share capital which the shareholders are required to pay?

• Calls in Arrears

• Paid-up Share Capital

• Authorised Share Capital

• Called-up Share Capital

Wati Berhad has an authorized capital of 10,000,000 shares, comprising of 3,000,000 6% Preferred Shares of RM2 each and 7,000,000 Ordinary Shares of RM1 each. Only 2,000,000 6% Preferred Shares are issued and fully paid. 5,000,000 Ordinary Shares are issued and RM0.90 per sahre is called and paid-up. The Called-up Share Capiatl of the company is RM_____.

• 9,000,000

• 6,500,000

• 8,500,000

• 4,500,000

The holders of which of the following securities have voting power and are entitled to share the reserves of a limited company?

• Preference Shares

• Ordinary Shares

• Debentures

• Ordinary and Preference Shares

An ordinary shareholder normally has some rights which are proportionate to the number of shares held by him. These rights are_____

• the right to vote

• the right to audit the accounts

• the right to share the profits for dividends

• the right to have an interest of the net assets

When a limited company is liquidated, in which of the following order should its liabilities be paid?

• Creditors -> Preference Shareholders -> Ordinary Shareholders -> Loans

• Creditors -> Loans -> Preference Shareholders -> Ordinary Shareholders

• Creditors -> Loans -> Ordinary Shareholders -> Preference Shareholders

• Loans -> Creditors -> Ordinary Shareholders -> Preference Shareholders

Answer explanation

When a company goes bankrupt, always pay external liabilities first, then internal liabilities (Owner's Equity).

Order of External Liabilities:

1. 1. Trade Payables (Creditors)

2. 2. Loans

3. Order of Internal Liabilities:

4. 1. Preference Shareholders (has more priority in repayment of capital)

5. 2. Ordinary Shareholders

When the Issued Share Capital is fully called-up and paid up by the shareholders, then the Issued Share Capital is the same as the _____.

• Called-Up Share Capital

• Authorised Share Capital

• Nominal Share Capital

• Call in Arrear

Sulinna Sdn. Bhd. has a registered Capital of 6,000,000 Ordinary Shares of RM1 each of which 4,000,000 shares are issued and subscribed. It calls up only RM0.80 per share, and the whole amount called up is received. The paid-up Share Capital of the company is RM_______.

• 6,000,000

• 4,800,000

• 4,000,000

• 3,200,000

Answer explanation

Issued Share Capital: 4,000,000 shares of RM1 each

(RM4,000,000)

Called-up Share Capital: 4,000,000 shares of RM0.80

(RM3,200,000)

Paid-up Share Capital: Whole amount called up is received, hence exactly like Called-up Share Capital

(RM3,200,000)

When a shareholder of a limited company sells his shares to an outsider at a higher price, what is the effect on the amount of share capital of the company?

• Remain unchanged

• Uncertain

• Decrease

• Increase

Answer explanation

Share Capital = Remain Unchanged

However,

Share Premium = Increase