The table shows a company's equity. ordinary shares of $1.00 each $200 000 share premium account $80 000 revenue reserves $160 000 Changes now to be made to the equity (in the order given) are as follows: • a one-for-one bonus issue of ordinary shares • a rights issue of 100000 ordinary shares of $1.00 each at $1.40 per share. The company wishes to maintain reserves in the most flexible form. What will be the equity of the company?
✓ Correct Answer
The correct answer is A: ordinary share capital: $500 000, share premium: $40 000, revenue reserves: $40000
📋 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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