AccountingCode 9706
Limited companies
What this topic asks you to be able to do
- the characteristics of ordinary shares, bonus issues, rights issues, debentures, dividends and reserves, and how each one is dealt with in the accounts
- what a company and its shareholders each gain and lose when the company makes a bonus issue of shares, as well as when it makes a rights issue of shares
- what a company and its shareholders each gain and lose when the company issues shares and when it issues debentures
- how revenue reserves, meaning retained earnings and the general reserve, differ from capital reserves, meaning the share premium and the revaluation reserve
- how to set up ledger accounts that capture: an issue of ordinary shares, priced at par or above par; a rights issue of shares, priced at par or above par; a bonus issue of shares
- how to draw up a limited company's statement of profit or loss, its statement of financial position and its statement of changes in equity, where the company may either trade in goods or provide services
- the sources of finance that can be used for particular purposes
- apply what you understand about the financial accounts of sole traders, partnerships and limited companies when evaluating relevant information and reaching well-informed business decisions