Chapter 6: Company Accounts

Test Bank

Type: multiple choice question

Title: Chapter 06 Question 01

1) The accounts for Mark Ltd for the year ended 30 June 2024 show a profit for the year of £145,000. Retained profits at the beginning of the year amounted to £660,000 and an ordinary dividend of £30,000 was paid during the year. What will be the retained profits at 30 June 2024?

a. £545,000

b. £835,000

c. £775,000

d. £115,000

Type: multiple choice question

Title: Chapter 06 Question 02

2) Which of the following would be a current asset of a limited company?

a. Tax payable.

b. Trade receivables

c. Accruals.

d. Debenture interest owing.

Type: multiple choice question

Title: Chapter 06 Question 03

3) Which of the following is NOT deducted in arriving at a company's profit for the year?

a. Administration expenses.

b. The taxation charge for the year.

c. The cost of sales.

d. Dividends paid.

Type: multiple choice question

Title: Chapter 06 Question 04

4) Which one of the following statements regarding the share premium account is true?

a. The share premium account represents part of the company's reserves.

b. The share premium account arises when shares are issued at less than their nominal value.

c. The share premium account can only exist when the company has issued preference shares.

d. The share premium account increases when an existing shareholder sells their shares for more than they cost.

Type: multiple choice question

Title: Chapter 06 Question 05

5) Which one of the following would be a reserve found in the equity section of a company's statement of financial position?

a. Revalued property.

b. Bank balance.

c. Debentures.

d. Retained profits.

Type: multiple choice question

Title: Chapter 06 Question 06

6) Millennium Ltd increased its retained profits from £320,000 at 1 January 2024 to £400,000 at 31 December 2024. If the company paid dividends of £35,000 for the year ended 31 December 2024, then the profit for the year was:

a. £80,000.

b. £45,000.

c. £355,000.

d. £115,000.

Type: multiple choice question

Title: Chapter 06 Question 07

7) Extracts from Katherine’s statements of financial position are given below:

The amount raised by the ordinary share issue during the year was:

a. £1 million.

b. £4 million.

c. £8.5 million.

d. £3 million.

Type: multiple choice question

Title: Chapter 06 Question 08

8) Choi Ltd issued 500,000 £1 shares at £2.20 per share. Which of the following will occur as a result of the share issue?

a. Share capital will increase by £1.1 million.

b. Share premium will increase by £1,100,000.

c. Shareholders equity will increase by £1.1 million.

d. The share issue will raise £500,000.

Type: multiple choice question

Title: Chapter 06 Question 09

9) Lidia Ltd had a property on its statement of financial position at 30 June at a net book value of £720,000. The property was revalued at that date at £860,000. What will be the effect on the company's revaluation reserve?

a. The revaluation reserve will increase by £140,000.

b. The revaluation reserve will increase by £860,000.

c. The revaluation reserve will increase by £720,000.

d. The revaluation reserve will not change.

Type: multiple choice question

Title: Chapter 06 Question 10

10) Which of the following would NOT be an entry in a company's statement of changes in equity?

a. Profit for the year.

b. Interest expense for the year.

c. Dividends paid.

d. Share issue.