Cambridge IGCSE · Accounting (0452)

Limited companies: Practice Questions

4 multiple-choice questions marked as you go, and 2 written questions with worked solutions. All on Limited companies.

6 questions13 marksFree, no account

Question 1

1 mark

Which item is classified under equity in the statement of financial position of a limited company?

Question 2

1 mark

Which of the following describes a debenture in a limited company?

Question 3

1 mark

Which feature is typical of ordinary shares in a limited company?

Question 4

1 mark

A newly formed limited company issued $100,000$ ordinary shares of $\$1.00$ each at a premium of $\$0.20$ per share. During its first year of operations, the company made a profit for the year of $\$30,000$ and declared and paid an ordinary dividend of $\$0.05$ per share.

What is the total increase in the company's equity at the end of its first year of operation?

Question 5

4 marks

(a) Explain what is meant by the term limited liability in the context of a limited company.
(b) State two advantages of a business operating as a limited company rather than as a sole trader.

Write your answer out first, then check it against the worked solution.

Question 6

5 marks

The following information was extracted from the books of Woodgate Ltd at 31 December 2023:
- Retained earnings (1 January 2023): $\$12\,400$
- Profit for the year ended 31 December 2023: $\$42\,500$
- Transfer to General Reserve: $\$5\,000$
- Ordinary share dividend paid during the year: $\$8\,000$

Prepare the Statement of Changes in Equity for Woodgate Ltd for the year ended 31 December 2023 showing the columns for General Reserve, Retained Earnings, and Total.

Write your answer out first, then check it against the worked solution.

* The content provided by thinka is generated by AI and may not always be accurate or up-to-date. Please use it as a supplementary resource and verify with official materials.

You've seen the model answer. Now get yours marked.

This page can show you how a good answer looks. It cannot tell you what your answer was missing. thinka marks your written work against the real mark scheme in about 15 seconds.

Get My Answers Marked Back to the notes

Want more questions like these? Get a fresh set on this topic, marked as you go.

Practise More