Module 16 Flashcards
How to calculate cost of sales?
Opening inventory + purchases - closing inventory
You can only pay dividends out of what?
Retained earnings
What year was the companies act?
2006
The companies act 2006 allows limited liability status if you
Prepare accounts in accordance with IAS/IFRS
What is a LTD?
Private limited company
Owners are the shareholders and run the business
Can’t sell shares on stock market but can sell shares
What is a PLC?
Public limited company
Float on stock exchange
Anyone can buy shares on the stock market
Directors are not shareholders
Ordinary share capital must be at?
PAR/nominal value
Ordinary share premium is?
The amount above the nominal value a share is sold for
If equity increase what happens to the share price?
It goes up
Sell 10000 shares at nominal value 0.5 and 1 year later sell 10000 at 1.75, what are the journal entries?
Dr bank 5000
Cr share capital 5000
Dr Bank 17500
Cr share capital 5000 (10000 x 0.5)
Cr share premium 12500 (10000x1.25)
What is an accrual?
Recognised when occurs not when cash moves
Tax for a separate legal entity?
At year end the liability is estimated in the balance sheet
Always a current liability
What is the journal entry for limited companies tax?
Dr taxation expense P+L
Cr taxation payable (liability account, not yet paid but owe to HMRC)
What are dividends declared?
Becomes a constructive obligation once declared, liability then kicks in
Journal entry for dividends paid?
Dr retained earnings
Cr cash
Not an expense!
Shares and dividends are b/s items
