Question 1

A public issue of shares where the investor must state in advance the amount they are willing to pay for the shares is called a:

Accepted Answer

A) tender issue. 
B) private issue. 
C) share purchase plan. 
D) venture share issue. 
A) tender issue. 
B) private issue. 
C) share purchase plan. 
D) venture share issue.

Question 2

Jane and Jarrod have been employed by two different firms of photographers. They decide they should get together and establish their own business, called JJ Photographers. Each has decided to contribute $20,000 in cash to buy equipment, and they will rent premises in the local shopping centre. Both will work full time in the business and share profits and losses equally. They are not sure whether they should set up as a partnership or as a private company and have come to you for advice.
REQUIRED:
Explain to Jane and Jarrod the advantages and disadvantages of a partnership versus a private company structure for their new venture.

Accepted Answer

Advantages of a partnership (disadvantag

Question 3

Which of the following is not a rule in the framework used for monitoring and controlling the behaviour of company directors?

Accepted Answer

A) Subjectivity. 
B) Disclosure. 
C) Fairness. 
D) Accountability. 
A) Subjectivity. 
B) Disclosure. 
C) Fairness. 
D) Accountability.

Question 4

Small proprietary companies are relieved of many of the reporting requirements to which public companies are subject. A company is deemed to be 'small' if it satisfies two of three specified criteria. Which of the following is not one of the criteria?

Accepted Answer

A) It has consolidated gross profits of less than $30 million. 
B) Its consolidated gross assets at the end of the financial year are less than $12.5 million. 
C) It employs fewer than 50 employees at the end of the financial year. 
D) It has consolidated gross operating revenue of less than $25 million 
A) It has consolidated gross profits of less than $30 million. 
B) Its consolidated gross assets at the end of the financial year are less than $12.5 million. 
C) It employs fewer than 50 employees at the end of the financial year. 
D) It has consolidated gross operating revenue of less than $25 million

Question 5

The largest source of new finance for Australian companies is:

Accepted Answer

A) retained profits. 
B) share issues. 
C) bank loans. 
D) revaluations. 
A) retained profits. 
B) share issues. 
C) bank loans. 
D) revaluations.

Question 6

Shareholders who exercise their entitlement to a bonus issue of shares, in theory, will:

Accepted Answer

A) leave their wealth unchanged. 
B) reduce their proportional ownership in the company. 
C) increase their wealth. 
D) reduce their wealth. 
A) leave their wealth unchanged. 
B) reduce their proportional ownership in the company. 
C) increase their wealth. 
D) reduce their wealth.

Question 7

What is the main stock exchange in Australia?

Accepted Answer

A) NASDAQ. 
B) ASX. 
C) DAX. 
D) ASIC. 
A) NASDAQ. 
B) ASX. 
C) DAX. 
D) ASIC.

Question 8

Additional regulations that may apply to limited companies (depending on their classification)do not include requirements relating to:

Accepted Answer

A) the audit of annual reports by a registered auditor. 
B) a limited number of employees. 
C) the submission of annual reports to ASIC. 
D) preparation of annual reports in accordance with accounting standards. 
A) the audit of annual reports by a registered auditor. 
B) a limited number of employees. 
C) the submission of annual reports to ASIC. 
D) preparation of annual reports in accordance with accounting standards.

Question 9

A company issued 120,000 fully paid, 5% preference shares priced at $2 each. The dividend to be paid on the shares for a financial year is:

Accepted Answer

A) $5,000. 
B) $10,000. 
C) $20,000. 
D) $12,000. 
A) $5,000. 
B) $10,000. 
C) $20,000. 
D) $12,000.

Question 10

How are dividends that have been declared and authorized but remain unpaid at the end of the year, recorded in the statement of financial position?

Accepted Answer

A) as a current asset. 
B) as a current liability. 
C) as a non-current liability. 
D) as a non-current asset. 
A) as a current asset. 
B) as a current liability. 
C) as a non-current liability. 
D) as a non-current asset.

Question 11

Which statement is untrue for private (Pty Ltd)companies?

Accepted Answer

A) They tend to be associated with smaller businesses. 
B) There are fewer private companies in Australia than public companies. 
C) They are less regulated than public companies. 
D) The shareholders are often family members. 
A) They tend to be associated with smaller businesses. 
B) There are fewer private companies in Australia than public companies. 
C) They are less regulated than public companies. 
D) The shareholders are often family members.

Question 12

Redeemable preference shares:

Accepted Answer

A) are the same as bonus shares. 
B) can be repurchased by the company. 
C) allow the holders full voting rights. 
D) can be exchanged for ordinary shares. 
A) are the same as bonus shares. 
B) can be repurchased by the company. 
C) allow the holders full voting rights. 
D) can be exchanged for ordinary shares.

Question 13

Which of these is not an advantage of a private company compared to a partnership?

Accepted Answer

A) Perpetual life 
B) Easier transfer of ownership 
C) Limited liability 
D) Mutual agency 
A) Perpetual life 
B) Easier transfer of ownership 
C) Limited liability 
D) Mutual agency

Question 14

A company needs $3,000,000 for expansion. They decide to raise the capital by issuing new shares. How many shares does the company need to sell to raise the amount, if the last share issue was at a price of $1 each and the current market price for the company's shares is $1.50 per share?

Accepted Answer

A) 500,000 shares 
B) 100,000 shares. 
C) 1 million shares. 
D) 2 million shares. 
A) 500,000 shares 
B) 100,000 shares. 
C) 1 million shares. 
D) 2 million shares.

Question 15

Which of the following statements in relation to dividends is true?

Accepted Answer

A) Dividends represent drawings by the owners (shareholders)of the company. 
B) Dividends can be paid out of any equity account. 
C) Shareholders must be paid an annual dividend regardless of the type of share they hold. 
D) A company cannot declare both an interim and a final dividend. 
A) Dividends represent drawings by the owners (shareholders)of the company. 
B) Dividends can be paid out of any equity account. 
C) Shareholders must be paid an annual dividend regardless of the type of share they hold. 
D) A company cannot declare both an interim and a final dividend.

Question 16

Which general standard of reporting must financial accounts prepared by companies under the Corporations Act 2001 meet?

Accepted Answer

A) Accurate. 
B) Satisfactory. 
C) True and fair. 
D) Beyond a reasonable doubt. 
A) Accurate. 
B) Satisfactory. 
C) True and fair. 
D) Beyond a reasonable doubt.

Question 17

Why is a company required to retain a specific part of its capital?

Accepted Answer

A) protect the company's creditors. 
B) enable the payment of future dividends. 
C) facilitate a non-current asset replacement plan. 
D) use as security for future loans. 
A) protect the company's creditors. 
B) enable the payment of future dividends. 
C) facilitate a non-current asset replacement plan. 
D) use as security for future loans.

Question 18

If the retained profit figure in a company statement of financial position increases from the beginning of the year to the end of the year, it is most probable that:

Accepted Answer

A) profit for the year is less than dividends declared. 
B) bonus shares have been issued. 
C) additional capital has been raised during the year. 
D) profit for the year is more than dividends declared. 
A) profit for the year is less than dividends declared. 
B) bonus shares have been issued. 
C) additional capital has been raised during the year. 
D) profit for the year is more than dividends declared.

Question 19

The shareholders that are eligible to vote for the board of directors of a company are:

Accepted Answer

A) all shareholders holding more than 1,000 shares. 
B) all shareholders who attend the annual general meeting. 
C) all shareholders holding voting shares. 
D) all preference shareholders. 
A) all shareholders holding more than 1,000 shares. 
B) all shareholders who attend the annual general meeting. 
C) all shareholders holding voting shares. 
D) all preference shareholders.

Question 20

A bonus issue of shares will result in:

Accepted Answer

A) an increase in cash at bank. 
B) an increase in the number of issued shares. 
C) an increase in shareholders' equity. 
D) all of the above. 
A) an increase in cash at bank. 
B) an increase in the number of issued shares. 
C) an increase in shareholders' equity. 
D) all of the above.

A public issue of shares where the investor must state in advance the amount they are willing to pay for the shares is called a:

Which of the following is not a rule in the framework used for monitoring and controlling the behaviour of company directors?

Small proprietary companies are relieved of many of the reporting requirements to which public companies are subject. A company is deemed to be 'small' if it satisfies two of three specified criteria. Which of the following is not one of the criteria?

The largest source of new finance for Australian companies is:

Shareholders who exercise their entitlement to a bonus issue of shares, in theory, will:

What is the main stock exchange in Australia?

Additional regulations that may apply to limited companies (depending on their classification)do not include requirements relating to:

A company issued 120,000 fully paid, 5% preference shares priced at $2 each. The dividend to be paid on the shares for a financial year is:

How are dividends that have been declared and authorized but remain unpaid at the end of the year, recorded in the statement of financial position?

Which statement is untrue for private (Pty Ltd)companies?

Redeemable preference shares:

Which of these is not an advantage of a private company compared to a partnership?

A company needs $3,000,000 for expansion. They decide to raise the capital by issuing new shares. How many shares does the company need to sell to raise the amount, if the last share issue was at a price of $1 each and the current market price for the company's shares is $1.50 per share?

Which of the following statements in relation to dividends is true?

Which general standard of reporting must financial accounts prepared by companies under the Corporations Act 2001 meet?

Why is a company required to retain a specific part of its capital?

If the retained profit figure in a company statement of financial position increases from the beginning of the year to the end of the year, it is most probable that:

The shareholders that are eligible to vote for the board of directors of a company are:

A bonus issue of shares will result in:

Introduction to Accounting

Measuring and Reporting Financial Position

Measuring and Reporting Financial Performance

Regulatory Framework for Companies

Measuring and Reporting Cash Flows

Corporate Social Responsibility and Sustainability Accounting

Analysis and Interpretation of Financial Statements

Cost-Volume-Profit Analysis and Relevant Costing

Full Costing

Budgeting

Capital Investment Decisions

The Management of Working Capital

Financing the Business

Filters

Exam 4: Introduction to Limited Companies

A public issue of shares where the investor must state in advance the amount they are willing to pay for the shares is called a:

Which of the following is not a rule in the framework used for monitoring and controlling the behaviour of company directors?

Small proprietary companies are relieved of many of the reporting requirements to which public companies are subject. A company is deemed to be 'small' if it satisfies two of three specified criteria. Which of the following is not one of the criteria?

The largest source of new finance for Australian companies is:

Shareholders who exercise their entitlement to a bonus issue of shares, in theory, will:

What is the main stock exchange in Australia?

Additional regulations that may apply to limited companies (depending on their classification)do not include requirements relating to:

A company issued 120,000 fully paid, 5% preference shares priced at $2 each. The dividend to be paid on the shares for a financial year is:

How are dividends that have been declared and authorized but remain unpaid at the end of the year, recorded in the statement of financial position?

Which statement is untrue for private (Pty Ltd)companies?

Redeemable preference shares:

Which of these is not an advantage of a private company compared to a partnership?

A company needs $3,000,000 for expansion. They decide to raise the capital by issuing new shares. How many shares does the company need to sell to raise the amount, if the last share issue was at a price of $1 each and the current market price for the company's shares is $1.50 per share?

Which of the following statements in relation to dividends is true?

Which general standard of reporting must financial accounts prepared by companies under the Corporations Act 2001 meet?

Why is a company required to retain a specific part of its capital?

If the retained profit figure in a company statement of financial position increases from the beginning of the year to the end of the year, it is most probable that:

The shareholders that are eligible to vote for the board of directors of a company are:

A bonus issue of shares will result in:

Introduction to Accounting

Measuring and Reporting Financial Position

Measuring and Reporting Financial Performance

Regulatory Framework for Companies

Measuring and Reporting Cash Flows

Corporate Social Responsibility and Sustainability Accounting

Analysis and Interpretation of Financial Statements

Cost-Volume-Profit Analysis and Relevant Costing

Full Costing

Budgeting

Capital Investment Decisions

The Management of Working Capital

Financing the Business

Filters