16.1 Share capital transactions

Cards (55)

  • Ordinary shares grant voting rights to shareholders.

    True
  • Preference shareholders are typically paid dividends before ordinary shareholders.

    True
  • Ordinary shares provide shareholders with voting rights and entitlement to dividends after preference
  • Steps in issuing ordinary shares at par
    1️⃣ Cash received from shareholders
    2️⃣ Increase in Ordinary Share Capital
    3️⃣ Record the par value of shares issued
  • Issuing ordinary shares at par ensures the company's accounts accurately reflect the share capital structure.

    True
  • The Share Premium account records the amount exceeding the par value when shares are issued at a premium.
    True
  • The second journal entry for issuing shares at par records the par value in the Ordinary Share Capital account.

    True
  • When issuing shares at a premium, the Bank account is debited to record the cash received
  • What is share capital in a company?
    Money invested by shareholders
  • Holders of ordinary shares are entitled to dividends after preference
  • What are the two main types of share capital?
    Ordinary and preference
  • Preference shares generally lack voting rights but offer preferential dividend rights.
    True
  • When issuing ordinary shares at par, the cash received is debited to the Bank
  • When ordinary shares are issued at a premium, the premium is recorded in the Share
  • Match the type of share with its voting and dividend rights:
    Ordinary Shares ↔️ Voting rights, dividends after preference shareholders
    Preference Shares ↔️ No voting rights, preferential dividends
  • What type of shares entitle shareholders to dividends after preference shareholders?
    Ordinary shares
  • Preference shareholders are paid dividends before ordinary shareholders.

    True
  • When issuing ordinary shares at par, the bank account is debited
  • Which account is credited when ordinary shares are issued at par?
    Ordinary Share Capital
  • Preference shares typically do not have voting rights
  • Preference shareholders are paid dividends before ordinary shareholders.
    True
  • What are the journal entries for issuing ordinary shares at par value?
    1️⃣ Debit: Bank
    2️⃣ Credit: Ordinary Share Capital
    3️⃣ Debit: Ordinary Share Capital
    4️⃣ Credit: Ordinary Shares
  • In the first journal entry for issuing shares at par, what account is debited?
    Bank
  • The first journal entry for issuing shares at par records the cash received in the Bank
  • When shares are issued at a premium, what separate account is used to record the excess over par value?
    Share Premium
  • When shares are issued at a discount, what separate account is used to record the reduction from par value?
    Share Discount
  • When issuing shares at a discount, the Bank account is debited to record the cash received
  • The Share Discount account is credited when shares are issued at a discount.
    False
  • What account is debited when a company purchases its own shares?
    Treasury Shares
  • When canceling treasury shares, the Retained Earnings account is credited
  • Preference shares typically lack voting rights but have priority over ordinary shares in dividend payments.

    True
  • The Share Premium account is credited when shares are issued at a premium.

    True
  • When a company purchases its own shares, the Bank account is credited
  • The Ordinary Share Capital account is debited when repurchased shares are held as treasury shares.

    True
  • What happens to the Treasury Shares account when repurchased shares are canceled?
    It is debited
  • Ordinary shares grant voting rights
  • When ordinary shares are issued at par, the Bank account is debited, and the Ordinary Share Capital account is credited.

    True
  • What are the debit and credit entries when 1,000 ordinary shares with a par value of £10 each are issued?
    Debit Bank £10,000, Credit Ordinary Share Capital £10,000
  • When ordinary shares are issued at a premium, the Share Premium account is used to record the amount exceeding the par value.
  • Share premium is shown as a separate reserve account within the equity section.