Lecture 9 Flashcards

1
Q

What are the main features of limited companies?

A
  • Legal nature
  • perpetual life
  • limited liability
  • legal safeguards
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2
Q

What are the two main forms of limited companies?

A

Public limited company (Plc)
Private limited company (Ltd)

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3
Q

Ordinary shares = ?

A

Represent the basic units of ownership of a business

Ordinary shareholders are the primary risk takers as their shares are distributed only after all other claims are settled

They have voting rights

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4
Q

Preference shares = ?

A

Units of ownership in a business

where if a dividend is paid, the preference shareholders will be entitled to the first part of it up to a maximum value

Maximum is usually defined as a fixed percentage of the nominal value of the preference shares

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5
Q

What are the types of reserves?

A

Revenue reserves
Capital reserves

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6
Q

What are the sources of long-term finance?

A

Share issues
Retained earnings
Long-term borrowings

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7
Q

What various parts of shareholder’s equity are available for withdrawal?

A

Share capital & capital reserves = not available for withdrawal

Revenue reserves = available for withdrawal

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8
Q

What are the sources of external accounting rules for a UK Plc listed on the LSE

A

Company law
IFRS
Stock exchange rules imposed by FCA

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