Chapter 13_ Accounting For Limited Companies.pdf

Financial accounting F3 acca Practice questions Financial accounting F3 acca Practice questions Financial accounting F3 acca Practice questions

Accounting for Limited Companies

Prepared for Educational Purposes

August 14, 2025

Contents

2 Part 2: Answers with Detailed Explanations 10

1

1 Part 1: List of Questions

This section contains 50 multiple-choice questions based on accounting for limited compa-nies, including dividends, share issues, and financial statements Numbers are left-aligned from 1 to 50

1 Should dividends paid appear on the face of a company’s Statement of Profit or Loss?

a Yes

b No

2 At 31 December 2004 a company’s capital structure was as follows: Ordinary share capital (500,000 shares of 25c each) $125,000, Share premium account $100,000 Dur-ing the year ended 31 December 2005 the company made a rights issue of 1 share for every 2 held at $1 per share and this was taken up in full Later in the year the company made a bonus issue of 1 share for every 5 held, using the share premium account for the purpose What was the company’s capital structure at 31 December 2005?

a Share capital account: $225,000; Share premium account: $250,000

b Share capital account: $450,000; Share premium account: $125,000

c Share capital account: $212,500; Share premium account: $262,500

d Share capital account: $225,000; Share premium account: $325,000

3 Which of the following should appear as items in a companys Statement of Changes

in Equity? (1) Profit for the financial year, (2) Income from investments, (3) Gain on revaluation of non-current assets, (4) Dividends paid

a 1, 3 and 4

b 2 and 3 only

c 1, 2 and 3

d 1 and 4 only

4 The following information is available about a companys dividends: September 2005: Final dividend for the year ended 30 June 2005 paid: $100,000, March 2006: Interim dividend for the year ended 30 June 2006 paid: $40,000, September 2006: Final dividend for the year ended 30 June 2006 paid: $120,000 (declared in August 2006) What amounts, if any, should be disclosed in the company’s Statement of Profit or Loss for the year ended 30 June 2006 and its Statement of Financial Position as at that date?

a Statement of profit or loss: $160,000; Statement of financial position: $120,000

b Statement of profit or loss: $NIL; Statement of financial position: $120,000

c Statement of profit or loss: $NIL; Statement of financial position: $NIL

d Statement of profit or loss: $140,000; Statement of financial position: $NIL

5 At 30 June 2005 the capital and reserves of Smith, a limited liability company, were: Share capital (Ordinary shares of $1 each) $100,000,000, Share premium account

$80,000,000 During the year ended 30 June 2006, the following transactions took

place: 1 September 2005: A bonus issue of one ordinary share for every two held, using the share premium account 1 January 2006: A fully subscribed rights issue of two ordinary shares for every five held at that date, at $1.50 per share What would the balances on each account be at 30 June 2006?

a Share capital $210M; Share premium $110M

b Share capital $210M; Share premium $60M

c Share capital $240M; Share premium $30M

d Share capital $240M; Share premium $80M

6 Are dividends proposed but not yet paid recorded as a liability in the Statement of Financial Position?

a Yes

b No

7 A company has share capital of $200,000 (1,000,000 shares of 20c each) and a share premium of $50,000 It issues 1 share for every 4 held at $1 per share What is the new share capital?

a $250,000

b $300,000

c $200,000

d $275,000

8 Which of the following affects the retained earnings in the Statement of Changes in Equity?

a Issuance of new shares

b Profit for the year

c Share premium increase

d Revaluation of assets

9 A company paid an interim dividend of $50,000 in February 2006 and a final dividend

of $80,000 (declared July 2005) in September 2005 What is disclosed in the Statement

of Profit or Loss for the year ended 30 June 2006?

a $130,000

b $50,000

c $80,000

d $NIL

10 A companys share capital is $500,000 (2,000,000 shares of 25c each) It makes a bonus issue of 1 share for every 5 held using share premium What is the new share capital?

a $600,000

b $500,000

c $625,000

d $550,000

11 Which financial statement shows the movement in share capital during the year?

a Statement of Profit or Loss

b Statement of Financial Position

c Statement of Changes in Equity

d Statement of Cash Flows

12 A company with share capital of $300,000 (1,000,000 shares of 30c each) and share premium of $150,000 makes a rights issue of 1 share for every 3 held at $1.20 per share What is the new share premium?

a $240,000

b $150,000

c $270,000

d $300,000

13 Which of the following is recorded in the revaluation reserve?

a Profit from operations

b Gain on revaluation of property

c Dividends paid

d Share premium

14 A company paid a final dividend of $200,000 (declared August 2005) in September

2005 and an interim dividend of $100,000 in March 2006 What is the liability in the Statement of Financial Position at 30 June 2006?

a $300,000

b $100,000

c $200,000

d $NIL

15 A company has share capital of $400,000 (2,000,000 shares of 20c each) and share premium of $200,000 It makes a bonus issue of 1 share for every 4 held using share premium What is the new share premium?

a $150,000

b $200,000

c $100,000

d $250,000

16 Which of the following is NOT included in the Statement of Changes in Equity?

a Dividends paid

b Profit for the year

c Depreciation expense

d Revaluation gains

17 A companys share capital is $1,000,000 (5,000,000 shares of 20c each) It issues 1 share for every 5 held at $1.50 per share What is the new share capital?

a $1,200,000

b $1,000,000

c $1,250,000

d $1,300,000

18 A company declares a dividend of $150,000 in August 2006 for the year ended 30 June

2006 Where is this recorded as at 30 June 2006?

a Statement of Profit or Loss

b Statement of Financial Position

c Statement of Changes in Equity

d Not recorded

19 A company with share capital of $600,000 (3,000,000 shares of 20c each) and share premium of $300,000 makes a rights issue of 1 share for every 3 held at $1 per share What is the new share capital?

a $700,000

b $800,000

c $600,000

d $750,000

20 Which of the following affects the share premium account?

a Bonus issue using retained earnings

b Rights issue at a premium

c Profit for the year

d Dividends paid

21 A company paid an interim dividend of $60,000 in April 2006 and a final dividend of

$90,000 (declared July 2005) in September 2005 What is disclosed in the Statement

of Profit or Loss for the year ended 30 June 2006?

a $150,000

b $60,000

c $90,000

d $NIL

22 A company has share capital of $500,000 (2,500,000 shares of 20c each) and share premium of $200,000 It makes a bonus issue of 1 share for every 5 held using share premium What is the new share capital?

a $600,000

b $500,000

c $550,000

d $625,000

23 Which financial statement shows dividends paid during the year?

a Statement of Profit or Loss

b Statement of Financial Position

c Statement of Changes in Equity

d Statement of Cash Flows

24 A company with share capital of $800,000 (4,000,000 shares of 20c each) and share premium of $400,000 makes a rights issue of 1 share for every 4 held at $1.20 per share What is the new share premium?

a $500,000

b $400,000

c $480,000

d $520,000

25 Which of the following is recorded as a liability in the Statement of Financial Position?

a Proposed dividends not yet declared

b Dividends declared but not paid

c Profit for the year

d Revaluation gains

26 A company paid a final dividend of $250,000 (declared August 2005) in September

2005 and an interim dividend of $150,000 in March 2006 What is the liability in the Statement of Financial Position at 30 June 2006?

a $400,000

b $150,000

c $250,000

d $NIL

27 A company has share capital of $1,200,000 (6,000,000 shares of 20c each) and share premium of $600,000 It makes a bonus issue of 1 share for every 3 held using share premium What is the new share premium?

a $200,000

b $400,000

c $600,000

d $800,000

28 Which of the following is included in the Statement of Changes in Equity?

a Revenue from sales

b Dividends paid

c Operating expenses

d Interest expense

29 A companys share capital is $2,000,000 (10,000,000 shares of 20c each) It issues 1 share for every 5 held at $1.50 per share What is the new share capital?

a $2,400,000

b $2,000,000

c $2,500,000

d $2,600,000

30 A company declares a dividend of $200,000 in July 2006 for the year ended 30 June

2006 Where is this recorded as at 30 June 2006?

a Statement of Profit or Loss

b Statement of Financial Position

c Statement of Changes in Equity

d Not recorded

31 A company with share capital of $1,000,000 (5,000,000 shares of 20c each) and share premium of $500,000 makes a rights issue of 1 share for every 2 held at $1 per share What is the new share capital?

a $1,500,000

b $1,000,000

c $1,250,000

d $1,400,000

32 Which of the following affects retained earnings?

a Issuance of new shares

b Payment of dividends

c Share premium increase

d Revaluation of assets

33 A company paid an interim dividend of $70,000 in May 2006 and a final dividend of

$100,000 (declared July 2005) in September 2005 What is disclosed in the Statement

of Profit or Loss for the year ended 30 June 2006?

a $170,000

b $70,000

c $100,000

d $NIL

34 A company has share capital of $600,000 (3,000,000 shares of 20c each) and share premium of $300,000 It makes a bonus issue of 1 share for every 6 held using share premium What is the new share capital?

a $700,000

b $600,000

c $650,000

d $675,000

35 Which financial statement shows the revaluation reserve?

a Statement of Profit or Loss

b Statement of Financial Position

c Statement of Changes in Equity

d Statement of Cash Flows

36 A company with share capital of $900,000 (4,500,000 shares of 20c each) and share premium of $450,000 makes a rights issue of 1 share for every 3 held at $1.20 per share What is the new share premium?

a $600,000

b $450,000

c $550,000

d $650,000

37 Which of the following is recorded as a liability in the Statement of Financial Position?

a Proposed dividends not yet declared

b Dividends declared but not paid

c Profit for the year

d Revaluation gains

38 A company paid a final dividend of $300,000 (declared August 2005) in September

2005 and an interim dividend of $200,000 in March 2006 What is the liability in the Statement of Financial Position at 30 June 2006?

a $500,000

b $200,000

c $300,000

d $NIL

39 A company has share capital of $1,500,000 (7,500,000 shares of 20c each) and share premium of $750,000 It makes a bonus issue of 1 share for every 5 held using share premium What is the new share premium?

a $600,000

b $750,000

c $500,000

d $650,000

40 Which of the following is included in the Statement of Changes in Equity?

a Revenue from sales

b Dividends paid

c Operating expenses

d Interest expense

41 A companys share capital is $3,000,000 (15,000,000 shares of 20c each) It issues 1 share for every 5 held at $1.50 per share What is the new share capital?

a $3,600,000

b $3,000,000

c $3,750,000

d $3,900,000

42 A company declares a dividend of $250,000 in August 2006 for the year ended 30 June

2006 Where is this recorded as at 30 June 2006?

a Statement of Profit or Loss

b Statement of Financial Position

c Statement of Changes in Equity

d Not recorded

43 A company with share capital of $2,000,000 (10,000,000 shares of 20c each) and share premium of $1,000,000 makes a rights issue of 1 share for every 2 held at $1 per share What is the new share capital?

a $3,000,000

b $2,000,000

c $2,500,000

d $2,800,000

44 Which of the following affects retained earnings?

a Issuance of new shares

b Payment of dividends

c Share premium increase

d Revaluation of assets

45 A company paid an interim dividend of $80,000 in April 2006 and a final dividend of

$120,000 (declared July 2005) in September 2005 What is disclosed in the Statement

of Profit or Loss for the year ended 30 June 2006?

a $200,000

b $80,000

c $120,000

d $NIL

46 A company has share capital of $800,000 (4,000,000 shares of 20c each) and share premium of $400,000 It makes a bonus issue of 1 share for every 4 held using share premium What is the new share capital?

a $1,000,000

b $800,000

c $900,000

d $850,000

47 Which financial statement shows the revaluation reserve?

a Statement of Profit or Loss

b Statement of Financial Position

c Statement of Changes in Equity

d Statement of Cash Flows

48 A company with share capital of $1,200,000 (6,000,000 shares of 20c each) and share premium of $600,000 makes a rights issue of 1 share for every 3 held at $1.20 per share What is the new share premium?

a $800,000

b $600,000

c $700,000

d $750,000

49 Which of the following is recorded as a liability in the Statement of Financial Position?

a Proposed dividends not yet declared

b Dividends declared but not paid

c Profit for the year

d Revaluation gains

50 A company paid a final dividend of $350,000 (declared August 2005) in September

2005 and an interim dividend of $250,000 in March 2006 What is the liability in the Statement of Financial Position at 30 June 2006?

a $600,000

b $250,000

c $350,000

d $NIL

51 A company has share capital of $2,500,000 (12,500,000 shares of 20c each) and share premium of $1,250,000 It makes a bonus issue of 1 share for every 5 held using share premium What is the new share premium?

a $1,000,000

b $1,250,000

c $1,100,000

d $1,150,000

52 Which of the following is included in the Statement of Changes in Equity?

a Revenue from sales

b Dividends paid

c Operating expenses

d Interest expense

2 Part 2: Answers with Detailed Explanations

1 b No Explanation: Dividends paid are not expenses and do not appear in the

Statement of Profit or Loss (IAS 1) They are recorded in the Statement of Changes

in Equity

2 a Share capital account: $225,000; Share premium account: $250,000 Explanation:

Rights issue: 250,000 shares at $1, nominal $62,500, premium $187,500 Bonus issue: 150,000 shares at 25c, $37,500 from share premium Final: $225,000 share capital,

$250,000 share premium

3 a 1, 3 and 4 Explanation: Profit (1), revaluation gains (3), and dividends paid

(4) affect equity and appear in the Statement of Changes in Equity Income from investments (2) is in the Statement of Profit or Loss

4 b Statement of profit or loss: $NIL; Statement of financial position: $120,000 Ex-planation: Dividends are not in the Statement of Profit or Loss The final dividend

for 2006 ($120,000, declared August 2006) is assumed recognized as a liability at 30 June 2006

5 b Share capital $210M; Share premium $60M Explanation: Bonus issue: 50M

shares at $1, $50M from share premium Rights issue: 60M shares at $1.50, nominal

$60M, premium $30M Final: $210M share capital, $60M share premium

6 b No Explanation: Proposed dividends are not recognized as liabilities until

de-clared (IAS 10)

7 a $250,000 Explanation: Rights issue: 1,000,000 œ 4 = 250,000 shares at 20c =

$50,000 New share capital: $200,000 + $50,000 = $250,000

8 b Profit for the year Explanation: Profit for the year increases retained earnings

in the Statement of Changes in Equity

9 d $NIL Explanation: Dividends are not recorded in the Statement of Profit or Loss

(IAS 1)

10 a $600,000 Explanation: Bonus issue: 2,000,000 œ 5 = 400,000 shares at 25c =

$100,000 New share capital: $500,000 + $100,000 = $600,000

11 c Statement of Changes in Equity Explanation: The Statement of Changes in

Equity shows movements in share capital

12 a $240,000 Explanation: Rights issue: 1,000,000 œ 3 = 333,333.33 shares at $1.20,

premium $0.90 Π333,333.33 = $90,000 New share premium: $150,000 + $90,000 =

$240,000

13 b Gain on revaluation of property Explanation: Revaluation gains are recorded in

the revaluation reserve (IAS 16)