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Multiple choice questions

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Multiple choice questions


Try the following multiple choice questions to test your knowledge of this chapter. Once you have answered the questions, click on 'Submit Answers for Grading' to get your results. If your lecturer has requested that you send your results, please complete the routing information found at the bottom of your graded page and then click on the 'E-Mail Results' button. Please do not forward your results unless your lecturer has specifically requested that you do so.
This activity contains 10 questions.

Consider the following two statements:


1. The market value of a share is known as the par value 2. The face value of a share is known as the nominal value

What is the validity of each statement?

A B C D

During the financial year, Modbury Ltd had the following increases in reserves:
1. 500,000 from a revaluation of freehold premises 2. 800,000 in share premium 3. 400,000 from trading profit retained

Which of these are increases in revenue reserves?


1 only 2 and 3 1 and 2 3 only

Consider the following statements: 1 of 4

4/21/2012 4:20 PM

Multiple choice questions Consider the following statements:

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The following gains may legally be withdrawn from the company by shareholders:
1. gains that arise from the upward revaluation of non-current assets 2. realised gains that arise from the sale of non-current assets What is the validity of each statement?

A B C D

Which one of the following is correct? Accounting Standards are created by:
company law the Department of Trade and Industry the International Accounting Standards Board the Stock Exchange

Which one of the following is correct? Auditors of a company are principally accountable to:
the shareholders the Stock Exchange the Department of Trade and Industry the directors

Which one of the following is correct?

2 of 4

4/21/2012 4:20 PM

Multiple choice questions

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The law imposes a legal obligation to maintain appropriate accounting records for a company on:
the Company Secretary the directors the auditor the Finance Director

Consider the following statements:


1. Preference shares are a more risky form of investment than ordinary shares 2. Preference shares are a more risky form of investment than loan capital

What is the validity of each statement?

A B C D

The financial statements of Tamerton plc for the most recent year indicated the following:
1. 2. 3. 4. a bonus issue of shares a transfer of trading profit to reserves an increase in the revaluation reserve for non-current assets a rights issue of shares

Which of the above involved a movement of cash?


1 and 4 2 only 4 only 2 and 3

3 of 4

4/21/2012 4:20 PM

Multiple choice questions

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What is the main source of new long-term finance for UK limited companies?
Ordinary share capital Loan capital Preference share capital Retained profit

Consider the following statements.


1. Reserves represent a cash balance which has been retained within a company 2. A bonus issue will increase the wealth of existing shareholders

What is the validity of each statement?

A B C D

4 of 4

4/21/2012 4:20 PM