Limited companies

Question 1

Key features of a limited company

Answer 1

*Separate legal entity
*Owned by shareholders
*Limited liability
*Managed by directors
*Audited and published accounts

Question 2

Public held corporations

Answer 2

-allows public investment
-more stockholders
-regulated by stock exchange

Question 3

Private held corporations

Answer 3

-no public investments
-fewer stockholders
-not regulated by stock exchange

Question 4

Advantages of a corporation

Answer 4

• limited liability
  -ability to raise capital and transfer ownership

Question 5

Disadvantage of corporation

Answer 5

-additional taxes
-more paperwork

Question 6

Ordinary shares

Answer 6

voting rights
amount of dividend can vary
all companies have these

Question 7

Preference shares

Answer 7

no voting rights
fixed amount dividend annually
paid before ordinary shares

Question 8

how to record dividend payments

Answer 8

Debit- Dividends
Credit - Cash at bank

Question 9

What are retained earnings

Answer 9

Are the amount of earnings the company has kept or retained rather than distributed as dividends

Question 10

What is an interim dividend

Answer 10

Paid halfway through the accounting year when the profit for first half is known

Question 11

Final dividend explanation

Answer 11

additional to the interim dividend, paid at the end of the year