Limited Companies
Übersicht
A limited company is owned by its shareholders but treated by the law as a separate person in its own right. That single idea changes everything. The shareholders can lose only what they invested, the company can raise large sums by selling shares, and it carries on even when its owners change. In return the accounts become a little richer, because the profit now belongs to many owners and the law wants to see exactly how it is shared and kept.
In this lesson you will learn the capital structure of a company: ordinary and preference shares, general reserve, retained earnings and the debentures it borrows. You will prepare the company income statement, the statement of changes in equity that shows how the profit is used, and the statement of financial position with its distinctive equity section. Every figure ties together, so you can follow the profit from the income statement through to the equity that belongs to the shareholders.
Ziele
- how a limited company can be a trading, service, manufacturing business or a combination of these.
- the advantages and disadvantages of operating as a limited company.
- the term ‘limited liability’.
- the term ‘equity’.
- the capital structure of a limited company comprising preference share capital, ordinary share capital, general reserve and retained earnings.
- the features of ordinary share capital and loan capital (debentures).
- share capital: issued, called-up, and paid-up.
- how to prepare statements of profit or loss, statements of changes in equity and statements of financial position.
- how to make adjustments to financial statements as detailed in 5.1 (sole traders).
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Unterrichtsbewertung
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- What does the term limited liability mean for a shareholder? A. The company can only borrow a limited amount B. The shareholder can lose only the amount paid for the shares C. Dividends are limited to a fixed rate D. The number of shares is limited Answer: B
- Which item is a long-term loan rather than part of equity? A. Ordinary share capital B. General reserve C. Debentures D. Retained earnings Answer: C
- A company has 200,000 ordinary shares of $0.50 each, fully paid. What is the ordinary share capital? A. $400,000 B. $200,000 C. $100,000 D. $50,000 Answer: C
- A company has 100,000 6% preference shares of $1 each. What is the annual preference dividend? A. $600 B. $6,000 C. $60,000 D. $100,000 Answer: B
- In which section of the statement of financial position do general reserve and retained earnings appear? A. Non-current assets B. Current liabilities C. Non-current liabilities D. Equity Answer: D
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Empfohlene Bücher
Weiterlernen mit offenen Quellen
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Lehrbuchabschnitt
Explain the Process of Securing Equity Financing through the Issuance of Stock
"Principles of Accounting, Volume 1: Financial Accounting: Explain the Process of Securing Equity Financing through the Issuance of Stock" by OpenStax, OpenStax, Rice University, licensed under CC BY-NC-SA 4.0 (https://creativecommons.org/licenses/by-nc-sa/4.0/). Source: https://openstax.org/books/principles-financial-accounting/pages/14-1-explain-the-process-of-securing-equity-financing-through-the-issuance-of-stock. Access for free at https://openstax.org/books/principles-financial-accounting/pages/1-introduction
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Lehrbuchabschnitt
Compare and Contrast Owners’ Equity versus Retained Earnings
"Principles of Accounting, Volume 1: Financial Accounting: Compare and Contrast Owners’ Equity versus Retained Earnings" by OpenStax, OpenStax, Rice University, licensed under CC BY-NC-SA 4.0 (https://creativecommons.org/licenses/by-nc-sa/4.0/). Source: https://openstax.org/books/principles-financial-accounting/pages/14-4-compare-and-contrast-owners-equity-versus-retained-earnings. Access for free at https://openstax.org/books/principles-financial-accounting/pages/1-introduction
Von anderen Organisationen unter offenen Lizenzen veröffentlicht und wie gewünscht genannt. Links öffnen deren Websites.
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