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?
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. This question tests the candidate's understanding of companies (share capital & reserves) within the Accountingsyllabus. The examiner's mark scheme requires...
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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...
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