limited companies knowledge test Flashcards
example of extract income statement
Operating profit / Profit from operations
Less: Finance costs (Interest)
Profit before tax
Less: Tax on profits
Profit for the year
example of equity section
issued share capital
ordinary shares £1 each (at nominal value)
CAPITAL RESERVES
Share premium
Revaluation reserve
REVENUE RESERVES
Retained earnings
TOTAL EQUITY
example of equity
issued share capital
ordinary shares at £1 each (at nominal value)
CAPITAL RESERVES
Share premium
Revaluation reserve
REVENUE RESERVES
Retained earnings
TOTAL EQUITY
capital reserve
created as a result of non-trading profit
revaluation reserve
this is created when a non-current asset such as land and buildings is revalued at a higher value than was previously shown
share premium account
this is created when additional shares are issued at a higher amount than the nominal value.
revenue reserves
the accumulated profits from trading activities that have been kept in the company rather than paid out to shareholders.
The only revenue reserve is Retained Earnings
= Balance at the start of the year + Profit for the Year - Dividends paid
what happens to the bal at start of yr equity
The balances at the start of the year were the ‘Equity’ section of last year’s balance sheet
what happens to the bal at end of yr equity
The balances at the end of the year are the ‘Equity’ section of this year’s balance sheet
nominal value share premium and ordinary shares
The figures for ‘Ordinary shares’ are stated at nominal value, even if they were issued at a higher price. Any amount above the nominal value is shown under ‘Share premium’
number of issues shared
Share capital ÷ Nominal value of each share
dividends paid
Number of shares x Dividend per share
