Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

Accounting 1 > Accounting for Business 1 > Flashcards

Accounting for Business 1 Flashcards

(77 cards)

Start Studying
1
Q

what are the 3 different types of business entities

A

sole traders
partnerships
limited companies

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

what are the to types of limited companies

A

private limited

public limited

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

private limited companies are notated by

A

Ltd

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

public limited companies are notated by

A

PLC

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Features of a soletrader

A

one business owner who take total responsibility for the failure or success of their business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

examples of sole traders

A

taxi drivers
sports coaches
barristers
hairdresers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

is there a limit on liabilities for sole traders

A

no

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

what is a partnership

A

two or more individuals running a business together

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

in partnerships do all partners take an equal part in running the business

A

yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

do partnerships have limited liabilities

A

no

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

examples of partnerships

A

bricklayer and plasterer

accounting firm

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

what does it mean to say that a limited company has its own legal identity

A

it is regarded as separate to the people that own and manage the company

it has its own distinct name, in which it can enter into contacts and be sued

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

how can a limited liability company be formed

A

pay a registration fee and register to the Registrar of Companies

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

cash used to pay for shares in a company change the sofp how

A

increase cash in the company

increase share capital

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

what is capital introduced

A

this is how sole traders and partnerships put their own money into their business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

to buy shares means you buy

A

part ownership of that compan

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

what is share capital

A

cash financed by selling shares

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

what is the perpetual life of most sole traders and partnerships

A

usually dies with owners

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

what is the perpetual life of limited companies

A

shares are passes onto beneficiaries and directors are always assigned.

The business is quite separate from the people who own it so it has a much longer life

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

can private limited companies sell shares to the public

A

no

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

can public limited companies sell shares to the public

A

yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

what does LSE stand for

A

london stock exchange

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

what does NYSE stand for

A

new york stock exchange

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

what is a negative effect of being in a public limited liability company

A

stock exchange rules
corporate governance codes to improve ethics and accountability

more complex financial reporting regime

under pressure to do well and extreme scrutiny by journalists and financial analysts

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
example of public limited companies
shell aviva kerry group
26
what does AGM stand for
annual general meeting
27
what happens at an AGM
directors present annual report to shareholders shareholders come together an appoint a new director
28
What do voting rights at annual AGMs depend on
the number of shares held one share = one vote
29
what is the role of an auditor in a limited liability company
appointed by shareholders and are not involved in the day to day running of the company They verify the annual report
30
what is the role of an auditor in a limited liability company
appointed by shareholders and are not involved in the day to day running of the company They verify the annual report
31
What is the role of a director in a limited liability company
run the day to day operations
32
What is the function of the stock exchange
to enable companies to raise new finances to enable investors to sell their securities
33
what does EGM stand for
extraordinary general meeting
34
do sole traders and partnerships have to get their accounts audited or publish them publically why do these companies prepare annual reports
no theses companies only prepare annual reports to determine tax on profits and present to banks to apply for loans
35
What would happen if financial statements weren't regulated by auditors
directors could provide shareholders with false or misleading statements about the company's financial situation which may lead users to make poor economic decisions
36
How is finance introduced into sole traders and partnerships
capital introduced (start up capital to buy non current assets eg machinery amd meet the day to day expenses before revenue starts to flow in from sales)
37
What three things make up equity
share capital share premium retained earnings
38
the potential rewards available to shareholders reflect
the risk that they are willing to take
39
what are ordinary shares
the primary shares in a company may only receive from profits once all of the company's other claims have been settled
40
what are the advanatges of having ordinary shares
potential for very high dividends potential for value of shares to rise many times over carries votes in the compnay meetings
41
what are the limitations of owning ordinary shares in a company
very high risk may receive no dividends at all may lose their entire value in a liquidation
42
what are preference shares
shares that guarantee when dividends are paid, these shareholders will receive theirs first before any dividends are paid to ordinary share holders
43
what is a negative of being a preference shareholder
THey have a fixed dividend rate this means that even if profits are higher, they can only receive a maximum amount of dividends which means that an ordinary share holder could receive more than a preference share holder at times
44
on winding up or liquidation, how do preference shareholders get preference
once all creditors have been paid, preference shareholders receive their capital back before ordinary share holders
45
what are the restrictions on preference shareholders
fixed dividend rate no right to vote in general meetings
46
who decides on the nominal (par value) of shares
the owners
47
does the par value of a share need to be permanet
no
48
why might splitting and consolidating of shares be used
to make shares more marketable
49
what is splitting shares
eg halving the value of shares issuing each shareholder twice as many shares with half the original nominal value
50
what is consolidating of share
eg doubling the price of shares
51
to increase the price of shares
consolidating
52
to decrease the price of shares
splitting
53
what are reserves
Reserves are profits and gains that a company has made and which still form part of the shareholders’ equity.
54
revenue reserves are also known as
reatined earnings
55
what are revenue reserves
the company's trading profits as well as gains on the disposal of non-current assets.
56
what are capital reserves
earnings made from issuing shares at above their nominal value revaluing (upwards) non current assets
57
what is share premium
any amount over and above the par value of the shares issued
58
when are bonus issues issued
when there is a large surplus on retained earnings not yet distributes to shareholders as dividends
59
what are bonus earnings
when retained earnings are capitalised by turning distrubtable earnings into non distributable share capital
60
why might a company issue bonus issues
to save profits
61
what does a 2 for 5 bonus issue mean
for every 5 shares an existing shareholder has, 2 are given free
62
what are rights issues
new shares are issued to raise cash these shares are issued to the existing shareholders
63
why are rights issues in place
to prevent the dilution of existing shareholders' interests in a company's share capital
64
at what price are rights issues sold at
discount to the market price
65
why are rights issues sold at a discount to the market price
to encourage existing shareholders to take up their rights and subscribe more cash
66
is issuing shares at a discount (below par value) legal
no
67
what are dividends
distribution of profits to shareholders
68
are dividends an expense
no
69
is there a legal obligation to pay dividends
no
70
where are dividends deducted from
directly from retained earnings in SOFP
71
if a company has made a loss can they pay dividends
no
72
example of a short term finance option for a business
bank overdraft
73
can a bank demand for overdrafts to be repaid on demand
yes
74
how might a business finance itself in the medium to long term
bank loans
75
What is the function of the stock exhange
to enable companies to raise new finances to enable investors to sell their securities
76
what are limited liability companies
once shareholders have paid what they agreed to pay inshares, and the companies creditors are satisfied, shareholders have no further liabilities for the debts of their company The liability of the shareholders is restrcited to the amount they have subscribed to in shares
77
what is markup
Markup is the difference between a product’s selling price and cost as a percentage of the cost.

Accounting 1 (10 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions