Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

UNI accounting > limited companies > Flashcards

limited companies Flashcards

1
Q

what are examples of an unlimited companies?

A

partnerships and soletraders

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

what is an unlimited company?

A

means that anyone involved is liable for debts

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

why are unlimited companies high risk

A

no ring fence around personal and business assets (may have to sell personal items to meet debts)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

why are unlimited companies attractive to suppliers?

A

no risk to them, will always be paid

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

what is the difference between LC and P?

A

LC are an artificial legal person in that they are separate form those who own or mananfe it

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

in a LC how is capital divided?

A

into units called shares

anyone can buy to become a member

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

what is meant by a LC having a perpetual life?

A

if a shareholder dies then the business carries on

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

what is meant by limited liability>

A

shareholder only loses the amount in which they invested excluding any personal assets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

why is limited company unattractive to suppliers?

A

less likely to be aid back in the events of crash

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

what is difference between LC and P in terms of formation?

A

it is more formal

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

what has to happen to form a LC?

A

have to apply
application must include company name, where company registered, names of directors, public or private

cheap and easy, can do online

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

what else must be included in the application of formation?

A
  • memorandum of association
  • articles of association
  • statement of capital
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

what are the types of application documents?

A
  • memorandum of association
  • articles of association
  • statement of capital
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

what is the memorandum of association

A

application document
- statement by those forming comply that they wish to do so and will each take at least one share

say they want to do it

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

what is the articles of association?

A

application document

  • internal rules on relationship between company and stakeholders (partnership agreement)
  • polices regarding directors

(mechanics of organisation)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

what is the statement of capital?

A
  • no. shares company wishes to issue
  • nominal no. of shares
  • rights attached to shares
  • amount of capital already have
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

what are the two types of limited companies?

A

private (small) and public (big)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

what are the characteristics of a public LC>

A
  • offer shares to general public
  • big
  • only start trading with min £50,000 capital
  • at least 2 shareholders
  • ust hold annual general meeting AGM
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

how much capital is needed for a public LC?

A

50,000

20
Q

what is an AGM?

A

annual general meeting

all shareholder invited form a public LC

21
Q

what are the characteristics of a private LC

A
  • small
  • can’t offer shares to public just networks
  • usually has an owner-director
  • 1 or ore shareholders
22
Q

what are the advantages of being a limited company?

A
  • substantial capital can be raised
  • LC has own legal identity, separate to peoples assets
  • delegation of management function
    (step back and appoint management team)
  • limited liability
  • perpetual succesion
23
Q

what are the disadvantages of a LC?

A
  • subject to strict legal control, adhere laws (companies act 2006)
  • publicity, no secrets, cant hide competitive advantage
  • delegation to a few may be detrimental (management team may run it in they favour)
24
Q

how is a LC run?

A

separate manager and owners (compared to partnerships

running of company delegated to mangers

25
Q

how are manager elected?

A

by shareholders at AGM

26
Q

what are the managers responsibilities?

A
  • keeping proper book and amounts

- providing shareholders with fincinacial state to address fiincanial performance and psotoion firm

27
Q

what is an annual report?

A

something management team punish to report back to shareholders
formal communication tool
- usually 100 + pages
- important in PRincludes statements

28
Q

what are the sections in the annual report?

A
  • CEO letter
  • chairmans letter
  • financial statements
29
Q

what is the chairmans letter/

A

widely read
describes how organisation is going
they are independent of company

30
Q

what finical statements are included in annual report?

A 
as a minimum 
SOFP 
income 
statement of change sin equity 
statement of cash flow
31
Q

what is the statement of change in equity

A
  • similar to appropriation account
  • specific to limited companied
  • understand changes in capital and reserves that took place)
  • shows the changes in equity over time by presenting the movement of reserves
32
Q

what are dividends?

A

sum of money paid regularly to its share holders

33
Q

when do shareholders get a say in how much dividends is given?

A

at the AGM

final approval

34
Q

what is available for dividends?

A

revenue reserves

35
Q

what is a reserve?

A

a sum of money appropriated for a purpose
usually equity
money held in company for unforeseen contingencies
to deal with something they haven’t considered

36
Q

what is not available for dividends

A

share capital

capital reserves

37
Q

what is equity made up of?

A

capital or reserves

38
Q

what are the type of reserves?

A

revenue or capital

39
Q

what are capital reserves?

A
  • reserve created out of capital profit
  • used to meet capital loss
  • longer term projects
40
Q

what are revenue reserves

A
  • created out of revenue profit
  • available for shareholders for dividend payments
  • help strengthen financial position
41
Q

what is the strategic report?

A
  • newest part of annual report
  • companies act 2006
  • focus on long term plans
  • identify risks
  • issues included such as environment
42
Q

what is the auditors report?

A
  • indeendnat assemenet by certified accountants
  • offers a professional opinion on whether accounts give a fair view of state of affairs of the company
  • have responsiibitly to report what managers are doing in company to owners
43
Q

why might auditors report not be correct?

A
  • only look at some parts

- not 100% is looked at

44
Q

where did corporate governance come form?

A

born from financial scandals

45
Q

what is corporate governance?

A

it is a system in which organisations are governed and controlled
every organisation that is a limited company must adhere to corporate governance code 2016
must have a section on it in annual report
based on strong moral principles

UNI accounting (8 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions