Shares

Question 1

Market value =

Answer 1

Share price

Question 2

Par (nominal value) =

Answer 2

Value of share when the company was incorporated

Question 3

Authorised capital =

Answer 3

Maximum of share capital a company can issue

Question 4

Issued capital =

Answer 4

Par amount of share capital issued to shareholders

Question 5

Called up capital =

Answer 5

When shared are issued/ allotted, a company doesn’t expect the full amount to be paid, they wait for a later date before the remainder is called up

Question 6

Paid up capital =

Answer 6

When capital is called up, some shareholders might delay or default on their payment

Question 7

Retained earnings =

Answer 7

Profits earned by a company and not appropriated by dividends, taxation or transfer to another reserve account

Question 8

Equity shares double entry

Answer 8

DR Bank
CR Share Capital
CR Share Premium

Question 9

Redeemable preference shares double entry

Answer 9

DR Cash

CR Redeemable preference shares

Question 10

Bonus issue =

Answer 10

Shares offered to existing shareholders (always offered at par (nominal) value

Question 11

Bonus issue double entry

Answer 11

DR Share premium

CR Share capital

Question 12

Rights issue =

Answer 12

Usually discounted shares offered to existing shareholders

Question 13

Rights issue double entry

Answer 13

DR Bank
CR Share Capital
CR Share Premium