Accounting For limited companies

Question 1

Regulatory Framework

Answer 1

Accounting standards
company law

Question 2

Annual reports and accounts

Answer 2

Available to every shareholder of a limited company. it includes the financial statements and the directors’ report and auditors report

Question 3

Stakeholders in published accounts:

Answer 3

• Internal: shareholders, management, employees
• external: customs, suppliers, lenders, the government and government agencies, the local community

Question 4

Directors Responsiblities

Answer 4

Responsible for ensuring that the company and government agencies, the local community

Question 5

IAS 1, Presentation of financial statements

Answer 5

Sets out how financial statements should be prepared to ensure comparability. it states that a complete set of financial statements comprises:

Income statements
Statement of financial position
statement of changes in equity
statement of cash flows
accounting policies and explanatory notes

Question 6

IAS 1 requires compliance with a number of accounting concepts and other considerations being:

Answer 6

going concern
accruals
consistency
materiality
offsetting
comparative information

Question 7

Bonus issue

Answer 7

is the capitalisation of reserves in the form of fee shares issued to exisiting ordinary shareholders in proportion to their holdings; no cash flows into the company

Question 8

Rights in raising cash

Answer 8

A rights issue is the raising of cash by offering shares to existing shareholders, in proportion to their existing holding.