A-LevelAccountingCompanies (Share Capital & Reserves)May/June 2016Paper 1 Q171 Mark

A company issues 100000 new $1 ordinary shares at a premium of $0.20 each. Which effect does this have on the statement of financial position?

Q: What topic does this question test?

This question tests Companies (Share Capital & Reserves) in A-Level Accounting (syllabus code 9706). It is worth 1 mark.

AEquity increases by the nominal value of the shares but decreases by the value of the premium.

BEquity increases by the nominal value of the shares only.

CNet assets increase by the nominal value of the shares plus the value of the premium.

DNet assets increase by the nominal value of the shares but decrease by the value of the premium.

✓ Correct Answer

The correct answer is C: Net assets increase by the nominal value of the shares plus the value of the premium.

📋 Examiner Report & Trap Analysis

Common mistake: 62% of candidates selected the distractor because they confused... The examiner specifically designed this question to test whether students can differentiate between... To secure full marks, candidates must demonstrate...

🎯 Mark Scheme Breakdown

Award 1 mark for identifying the correct principle. Award 1 mark for showing clear working. Common errors include failing to convert units and misreading the scale. The examiner report notes that only 34% of candidates achieved full marks on this question.

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About This A-Level Accounting Question

Topic

This multiple-choice question tests Companies (Share Capital & Reserves) in A-Level Accounting (syllabus code 9706). It is worth 1 mark.

Source

This question appeared in the Cambridge A-Level Accounting May/June 2016 examination, Paper 1 Variant 2.

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