UTech IFACC Company Accounts Quiz

A company

• The registration process includes the completion of the Articles of Incorporation

• is regulated by the Companies’ Act, or other related Act in a jurisdiction

• may be established as being a public or as a private company

• consists of two or more individuals

Which is not a feature of a company?

• stipulated procedures for start up, continuation and winding up

• the change in ownership doesn't affect the continuation

• a separate legal entity from its owners

• its owners are called shareholders

Which of the following is not an internal source of financing a company?

• Convertible Debts

• Preference shares issuance

• Use of retained profits

• Revenue reserves

Internal Financing: the amount contributed as capital by the owners of the business

Identify the factors that distinguishes a company from other forms of business

• No formal way of operating or winding up of operations

• Owners are called shareholders

• payment to those in managerial positions is called management fees

• the entity is a separate legal entity

often referred to as equity shares an the shareholders may receive dividends from the company’s profits

Which statements are correct re Ordinary Shares (O/S) and Preference Shares (P/S)?

• O/s are called common shares while holders of preference shares gets preferential treatment

• O/s holders are owners while P/S holders are investors

• O/s holders have voting rights while P/S holders don't.

• O/s holders gets dividends first while P/S gets dividend only if available after the owners get

The shares may be classified as participatory or non-participatory and the holders to have special or preferred rights. 

The shares in a public company are traded either directly to the public, or are transferred from one shareholder to another, generally through the Stock Exchange

• True

• False

Upon liquidation a Preference share holder would be compensated after Ordinary share holders (the owners)

• True

• False