Important Terms

Question 1

Do not rank for dividend

Answer 1

Shares that do not receive a dividend in the year of purchase only in the next year

Question 2

Net tangible assets

Answer 2

Physical asset such as land, vehicles

Question 3

Intangible assets

Answer 3

Non physical asset such as goodwil, but have monetary value

Question 4

Nominal share value

Answer 4

The face or nominal value of a share in the UK (par value in Namibia) eg. 10 000 ordinary shares of £1 each- par value.

• not market related
• share slit is when par valueif share is changed.

Question 5

Difference between net tangile assets and selling price of a company is called:

Answer 5

Goodwil

Question 6

Real accounts

Answer 6

Ledger accounts for assets, owners equity and liabilities (balance sheet section)

Question 7

Capital employes:

Answer 7

total funds invested in a business made up of opening capital (shareholder’s funds) + profit for the year less drawings (+ retained profit) plus long term liabilities

Question 8

Capital

Answer 8

Funds invested in a business in order to aquire the assets which a business needs to trade

Question 9

What is the difference between capital employed and capital?

Answer 9

Capital employed:total funds invested in a business made up of opening capital (shareholder’s funds) + profit for the year less drawings (+ retained profit) plus long term liabilities
Capital:Funds invested in a business in order to aquire the assets which a business needs to trade

Question 10

Deferred expenditure

Answer 10

Accrued expenses/ expense not paid at end of financial year

Question 11

The difference between provision and liabilities

Answer 11

PROVISION
1) An amount written off by way of providing for depreciation and diminution of assets
2) An amount retained by way of providing for any known liability of which the amount cannot be determined with ‘substantial’ accuracy eg. Provision for bad debts.
LIABILITIES
Are amounts owing which can be determined with ‘substantial’ accuracy. Sometimes, the difference between a provision and a liability hinge around ‘substantial’ accuracy. Rent owing at the end of a year would normally be known with precision and would be a liability. Legal charges for case heard, but for which we have not received a bill would be a provision.

Question 12

Equity shares

Answer 12

Ordinary shares