Question 1

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. A

Question 2

The type of company that has the right to raise money from the general public is a:

Accepted Answer

A)  proprietary company. 
B)  public company. 
C)  private company. 
D)  all of the above. 
A)  proprietary company. 
B)  public company. 
C)  private company. 
D)  all of the above. B

Question 3

The report that is specifically designed to provide an assessment of the credibility and reliability of the financial statements a company issues for external use,is the:

Accepted Answer

A)  audit report. 
B)  director's statement. 
C)  director's report. 
D)  trustee statement. 
A)  audit report. 
B)  director's statement. 
C)  director's report. 
D)  trustee statement. A

Question 4

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 5

Which of these is an advantage of a private company compared to a partnership?
i.Perpetual life.
ii.Easier transfer of ownership.
iii.Mutual agency.
iv.Limited liability.

Accepted Answer

A)  i, ii. 
B)  i, ii, iii. 
C)  i, ii, iv. 
D)  ii, iii, iv. 
A)  i, ii. 
B)  i, ii, iii. 
C)  i, ii, iv. 
D)  ii, iii, iv.

Question 6

The shareholders are the owners of a company.The shareholders' equity of Adventure Travel Agency Pty Ltd is set out below.(Note that all shares were issued when the company was originally set up and there have been no subsequent issues.)
 Adventure Travel Agency Fty Ltd
Statement of Financial Position (extract) as at 30 June 2014
Shareholders'equity
Share Capital -
$\begin{array} { l r } 60,000 \text { ordinary shares sold for } \$ 10 \text { each } & \$ 600,000 \ \text { Retained profits } & 20,000 \ \text { General reserve } & 12,000 \ \text { Asset revaluation reserve } & 180,000 \ \text { Total equity } & \$ 812,000 \end{array}$ 
REQUIRED:
a)Briefly explain the meaning of each of the four components of shareholders' equity,giving an example of how each might have arisen.
b)Indicate which of the four components are legally available for the payments of cash dividends.

Accepted Answer

a)Share capital is the cash contributed

Question 7

If a company has a share capital of $100,000,revenue reserves of $15,000 and retained profits of $30,000,what is the maximum amount it can legally distribute as cash dividends?

Accepted Answer

A)  $130,000. 
B)  $45,000. 
C)  $145,000. 
D)  $30,000. 
A)  $130,000. 
B)  $45,000. 
C)  $145,000. 
D)  $30,000.

Question 8

Dividends that have been declared and authorised but remain unpaid at the year-end,are recorded in the statement of financial position as a:

Accepted Answer

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

Question 9

The main government regulator of companies in Australia is:

Accepted Answer

A)  The Australian Securities and Investments Commission. 
B)  The Auditors Board. 
C)  The Australian Securities Exchange. 
D)  The Australian Accounting Standards Board. 
A)  The Australian Securities and Investments Commission. 
B)  The Auditors Board. 
C)  The Australian Securities Exchange. 
D)  The Australian Accounting Standards Board.

Question 10

If the tax rate is 30%,interest expense is $15,000 and operating profit is $78,000,what is the profit for the year?

Accepted Answer

A)  $63,000. 
B)  $44,100. 
C)  $54,600 
D)  None of the above. 
A)  $63,000. 
B)  $44,100. 
C)  $54,600 
D)  None of the above.

Question 11

Which of the following factors does not influence a firm's dividend decision?

Accepted Answer

A)  A desire to have good investor relations. 
B)  Cash available to pay a dividend. 
C)  Wanting to reduce paid-up capital. 
D)  The need for finance for an investment. 
A)  A desire to have good investor relations. 
B)  Cash available to pay a dividend. 
C)  Wanting to reduce paid-up capital. 
D)  The need for finance for an investment.

Question 12

A share issue where the company gives existing shareholders the first right of refusal of the issue is:

Accepted Answer

A)  an ordinary issue. 
B)  a bonus issue. 
C)  a rights issue. 
D)  a preference issue. 
A)  an ordinary issue. 
B)  a bonus issue. 
C)  a rights issue. 
D)  a preference issue.

Question 13

A bonus issue of shares by a company will:

Accepted Answer

A)  increase total shareholders' equity. 
B)  sometimes increase shareholders' equity and sometimes leave it unchanged. 
C)  leave total shareholders' equity unchanged. 
D)  reduce total shareholders' equity. 
A)  increase total shareholders' equity. 
B)  sometimes increase shareholders' equity and sometimes leave it unchanged. 
C)  leave total shareholders' equity unchanged. 
D)  reduce total shareholders' equity.

Question 14

The main difference between the financial statements prepared for a sole proprietorship and those prepared for a company is:

Accepted Answer

A)  the number of statements that must be prepared. 
B)  the detail in the reports. 
C)  sole proprietorship's reports are always prepared at the end of December. 
D)  companies do not have to prepare a cash flow statement. 
A)  the number of statements that must be prepared. 
B)  the detail in the reports. 
C)  sole proprietorship's reports are always prepared at the end of December. 
D)  companies do not have to prepare a cash flow statement.

Question 15

Which type of company operating under the Corporations Act must have the words Proprietary Limited (Pty Ltd)after its name?

Accepted Answer

A)  Proprietary company. 
B)  No liability company. 
C)  Company listed on the stock exchange. 
D)  Public company. 
A)  Proprietary company. 
B)  No liability company. 
C)  Company listed on the stock exchange. 
D)  Public company.

Question 16

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.

Question 17

If operating profit is $131,000,tax expense is $39,000 and profit for the year is $82,000,what is the interest expense?

Accepted Answer

A)  $43,000. 
B)  $49,000. 
C)  $10,000. 
D)  Unable to be calculated. 
A)  $43,000. 
B)  $49,000. 
C)  $10,000. 
D)  Unable to be calculated.

Question 18

A company issued 300,000 ordinary shares to the public,priced at $1.The shares were payable 50 cents on 1 July 2014 and 50 cents was uncalled.How much cash was due to the company on 1 July from the issue?

Accepted Answer

A)  $150,000. 
B)  $300,000. 
C)  $100,000. 
D)  $250,000. 
A)  $150,000. 
B)  $300,000. 
C)  $100,000. 
D)  $250,000.

Question 19

The main stock exchange in Australia is the:

Accepted Answer

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

Question 20

A company issued 100,000 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)  $15,000. 
A)  $5,000. 
B)  $10,000. 
C)  $20,000. 
D)  $15,000.

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

The type of company that has the right to raise money from the general public is a:

The report that is specifically designed to provide an assessment of the credibility and reliability of the financial statements a company issues for external use,is the:

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

Which of these is an advantage of a private company compared to a partnership? i.Perpetual life. ii.Easier transfer of ownership. iii.Mutual agency. iv.Limited liability.

If a company has a share capital of $100,000,revenue reserves of $15,000 and retained profits of $30,000,what is the maximum amount it can legally distribute as cash dividends?

Dividends that have been declared and authorised but remain unpaid at the year-end,are recorded in the statement of financial position as a:

The main government regulator of companies in Australia is:

If the tax rate is 30%,interest expense is $15,000 and operating profit is $78,000,what is the profit for the year?

Which of the following factors does not influence a firm's dividend decision?

A share issue where the company gives existing shareholders the first right of refusal of the issue is:

A bonus issue of shares by a company will:

The main difference between the financial statements prepared for a sole proprietorship and those prepared for a company is:

Which type of company operating under the Corporations Act must have the words Proprietary Limited (Pty Ltd)after its name?

A bonus issue of shares will result in:

If operating profit is $131,000,tax expense is $39,000 and profit for the year is $82,000,what is the interest expense?

A company issued 300,000 ordinary shares to the public,priced at $1.The shares were payable 50 cents on 1 July 2014 and 50 cents was uncalled.How much cash was due to the company on 1 July from the issue?

The main stock exchange in Australia is the:

A company issued 100,000 fully paid,5% preference shares priced at $2 each.The dividend to be paid on the shares for a financial year is:

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

Costvolumeprofit 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

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

The type of company that has the right to raise money from the general public is a:

The report that is specifically designed to provide an assessment of the credibility and reliability of the financial statements a company issues for external use,is the:

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

Which of these is an advantage of a private company compared to a partnership? i.Perpetual life. ii.Easier transfer of ownership. iii.Mutual agency. iv.Limited liability.

If a company has a share capital of $100,000,revenue reserves of $15,000 and retained profits of $30,000,what is the maximum amount it can legally distribute as cash dividends?

Dividends that have been declared and authorised but remain unpaid at the year-end,are recorded in the statement of financial position as a:

The main government regulator of companies in Australia is:

If the tax rate is 30%,interest expense is $15,000 and operating profit is $78,000,what is the profit for the year?

Which of the following factors does not influence a firm's dividend decision?

A share issue where the company gives existing shareholders the first right of refusal of the issue is:

A bonus issue of shares by a company will:

The main difference between the financial statements prepared for a sole proprietorship and those prepared for a company is:

Which type of company operating under the Corporations Act must have the words Proprietary Limited (Pty Ltd)after its name?

A bonus issue of shares will result in:

If operating profit is $131,000,tax expense is $39,000 and profit for the year is $82,000,what is the interest expense?

A company issued 300,000 ordinary shares to the public,priced at $1.The shares were payable 50 cents on 1 July 2014 and 50 cents was uncalled.How much cash was due to the company on 1 July from the issue?

The main stock exchange in Australia is the:

A company issued 100,000 fully paid,5% preference shares priced at $2 each.The dividend to be paid on the shares for a financial year is:

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

Costvolumeprofit Analysis and Relevant Costing

Full Costing

Budgeting

Capital Investment Decisions

The Management of Working Capital

Financing the Business

Filters