Limited companies：練習題

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

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

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

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?

(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.

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.