Y11 Accounting - C21 Limited Companies

What is a key advantage of operating as a limited company?

• No need for financial statements

• No legal requirements

• Limited liability for shareholders

• Unlimited liability for shareholders

What does the term 'limited liability' mean?

• Shareholders' liability is limited to their investment

• Shareholders have no liability

• Shareholders are liable for all company debts

• Shareholders can lose more than their investment

Which of the following is NOT a type of share capital?

• Called-up capital

• Debentures

• Preference shares

• Ordinary shares

What is 'paid-up capital'?

• Capital that has been issued but not paid for

• Capital that has been requested for payment

• Capital that has been fully paid by shareholders

• Capital that is not required by the company

What is the main difference between preference shares and ordinary shares?

• Preference shares are riskier

• Ordinary shares are not tradable

• Preference shares have fixed dividends

• Ordinary shares have fixed dividends

What is a debenture?

• A type of share

• A long-term loan with fixed interest

• A type of equity

• A short-term loan

What is the purpose of the statement of changes in equity?

• To list all shareholders

• To summarize how profits are used

• To show the company's total assets

• To detail the company's liabilities

What is an interim dividend?

• Paid after financial statements are published

• Paid only to ordinary shareholders

• Paid before financial statements are published

• Paid only to preference shareholders

What is retained earnings?

• Total liabilities of the company

• Total assets of the company

• Profit kept for reinvestment

• Profit distributed as dividends

What is a general reserve?

• A fund for future expenses

• A mandatory payment to shareholders

• A type of share capital

• A type of loan