5.3 Business Accounts: Company Accounts Flashcards

(35 cards)

1
Q

Why does a declared and paid final dividend affect retained earnings in BS

A

Reduces profits carried forward in P+L

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2
Q

What account is used to fund a bonus issue of shares

A

RE/Premium Account

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3
Q

How is the bottom 1/2 of BS for company different from ST/P

A

Consists of share capital, reserves and retained earnings

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4
Q

If final dividend has not been approved by Ms yet, what is the effect

A

Only proposed and not enforceable, so does not show on SoCiE

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5
Q

How does a loan affect BS

A

Adds to liabilities + current assets

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6
Q

Where do Retained Earnings in bottom 1/2 of BS come from

A

SoCiE

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7
Q

How do interim dividends appear on SoCiE

A

As declared (paid) dividends

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8
Q

What is impairment in company P+L account

A

Provision for DDs

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9
Q

What happens if investment is written down

A

Reduce value of asset + reduction = expense in P+L

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10
Q

Two kinds of dividends

A

Final or interim

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11
Q

Why should net assets always balance w/ total equity

A

Assets represent manner equity is being used

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12
Q

If final dividend declared but not paid, what is the effect

A

Shows on SoCiE + BS as current liability (bc enforceable)

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13
Q

Where are dividends recorded

A

Statement of Changes in Equity

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14
Q

How are the reserves in BS split

A

Capital + revenue

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15
Q

How do unpaid preference shares show on accounts

A

In SoCiE to calculate Retained Earnings, and as current liability in top hold of BS (as not paid yet)

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16
Q

Three main differences between company accounts, and ST/P

A

Tax, dividends and bottom 1/2 of BS

17
Q

What is the effect of including something as an expense in P+L on BS

A

Reduces Retained Earnings when transferred across

18
Q

If profits are not paid in a dividend, what happens

A

They are retained

19
Q

What makes up the revenue reserves

A

Retained earnings

20
Q

How do you work out the cash generated by share issue

A

Times shares issued by their nominal value

21
Q

What are investments in ALCIE

22
Q

Why is tax different for a company compared to ST + P

A

Company pays corporation tax

23
Q

What kind of reserve account can be distributed as dividends

A

Revenue reserves

24
Q

Why do interim dividends only show on accounts if actually paid

A

Bc can be rescinded before it is paid

25
What are long-term liabilities called in company P+L account
Non-current liabilities
26
What are reserves in bottom half of BS
Capital in excess of called up value of issued share capital
27
What is a revaluation reserve (in bottom half of BS)
Ds show up-to-date value of non-current assets, as top half for net assets has increased
28
Example of capital reserve
Share premium account
29
How does an interim dividend show on accounts
Shows on SoCiE
30
When can companies declare dividends
If they have profits available for the purpose
31
When would the capital reserve account go up
When shares issued at a premium
32
If final dividend declared and paid, what is the effect
Only shows in SoCiE, but affects retained earnings in BS
33
When do interim dividends show on accounts
If actually paid
34
Where are dividends recorded and why
In SoCiE as capital, between business + owners
35
What is the ratio when issuing bonus shares
X (shares ISSUED): Y (shares CURRENTLY held)