FA - Capital Structure and Finance Costs

The statement Of financial position Of Cartwright co shows closing retained earnings Of

$320,568. The statement of profit or loss showed profit of $79,285. Cartwright Co paid last

year's dividend of $12,200 during the year and proposed a dividend of $13,500 at the year

end. This had not been approved by the shareholders at the end of the year.

What is the opening retained earnings balance?

• $241,283

• $387,653

• $254,783

• $253,483

The following extract is from the statement of profit or loss of Gearing Co for the year ended

30 April 20X5:

Profit before tax

Tax

Profit for the year

68,000

(32,0Ø)

36,000

In addition to the profit above:

Gearing Co paid a dividend of $21n during the year.

1

2 Again on revaluation of land resulted in a revaluation surplus of

What total amount will be added to retained earnings at the end of the financial year?

Which of the following items would NOT be included in the statement of changes in equity?

• Equity share capital

• Bank loans

• Revaluation surplus

• Dividends paid

Which of the following statements about preference shares is true?

• All preference shares are classified as a liability in the staternent of financial position

• Irredeemable preference shares are classified as a liability and redeemable preference

  shares as an equity in the statement of financial position

• All preference shares are classified as equity in the statement of financial position

• Irredeemable preference shares are classified as equity and redeemable preference

  shares as a liability in the statement of financial position

Which of the following statements is true in relation to a rights issue of shares by an entity?

• No cash is received by the entity as a result of making the rights issue

• The entity issues shares for cash at market price of the shares

• The entity issues shares for cash at a price less than the market price of the shares

• A rights issue is not presented in a statement of cash flows

Which of the following statements is true in relation to a bonus issue of shares by an entity?

• The entity issues shares for cash at a price less than the market price of the shares

• The entity issues shares for cash at market price of the shares

• No cash is received by the entity as a result of making the bonus issue

• A bonus issue will be presented in a statement of cash flows

When an entity pays a dividend, what accounting entries are required to account for the

transaction?

• Debit Credit

  Share capital Bank

• Debit Credit Share premium Bank

• Debit Credit

  Retained earnings Bank

• Debit Credit

  Profit or loss Bank

An entity made an issue of 20,CNX) $1 equity shares at a price of $1.75. What accounting

entries are required to record the issue of shares?

• Debit Bank $35,000, and Credit Share capital $35,000

• Debit Share capital $20,000, Debit Share premium $15,000 and Credit Bank $35,000

• Debit Bank $35,000, Credit Share premium $20,000 and Credit Share capital S15mo

• Debit Bank $35,000, Credit Share capital $20,Ü and Credit Share premium $15,000

Which of the following would NOT be included in a statement of changes inequity?

• Share premium

• Revaluation reserve

• Irredeemable preference shares

• Redeemable preference shares

Which Of the following statements are correct?

A limited company will always have both an equity share capital and a share premium

account,

A limited company will always have an equity share capital account, and may also have

a share premium account.

A limited company will always have either a share premium account or a revaluation

surplus account.

• I only

• 2 only

• I and 3

• 2 and 3