DPA30053 TOPIC 3

When a company issues a loan instrument, it records an increase in liabilities.

• TRUE

• FALSE

What type of account is created when a company issues a loan instrument?

• ASSET

• LIABILITIES

• EQUITY

• EXPENSES

The interest expense associated with a loan instrument is recognized as an expense.

• FALSE

• TRUE

At the time of loan issuance, if the company incurs issuance costs, how should these costs be treated in the accounting records?

• Expense immediately

• Increase the loan payable balance

• Ignore as they do not affect the financial statements

• Capitalize and amortize over the life of the loan

When a loan is issued, the company's bank account will ___________.

• Decrease

• Increase

• No Change

When preference shares are being redeemed, the company's bank account will ___________.

• Decrease

• Increase

• No Change

When preference shares are redeemed, the company reduces its equity by the amount of the shares redeemed.

• TRUE

• FALSE

Which of the following accounts is typically debited when redeeming preference shares?

• Bank

• Dividends Payable

• Preference Share Capital

• Retained earnings

Loan instruments is under Liabilities, whereas Share capital is under Equity

• TRUE

• FALSE

Ordinary shares can be redeemed under Company Act 2016

• TRUE

• FALSE