Question 15

Glados Ltd recently conducted a bonus issue of shares for their existing shareholders. What would the most likely effect of this have been on their accounts?

		Increased total equity and increased total assets
		Increased total equity only
		Increased total assets only
		No effect on the total equity or total assets

16

If shares are described as 6% cumulative preference shares, what does this mean?

		Holders of these shares are entitled to both a 6% annual dividend and whatever dividend the ordinary shareholders receive
		Holders of these shares are entitled to a 6% annual dividend, but if for whatever reason it is not paid one year, the right to that dividend is forfeited
		Holders of these shares are entitled to a 6% annual dividend, but if for whatever reason it is not paid one year, the right to that dividend carries forward until it is paid
		Holders of these shares are entitled to their choice of the 6% annual dividend or whatever dividend the ordinary shareholders receive

Question 18

Which of the following accounts is NOT an example of a reserve?

		Retained earnings
		Asset revaluation surplus
		Foreign currency translation reserve
		Share capital

Question 20

Which of these transactions would NOT have an effect on the retained earnings account?

		Closing the profit and loss summary account after a profit was made during the year
		Directors declaring a dividend, where shareholder approval is not needed
		Paying a dividend which was declared two months ago, where shareholder approval is not needed
		Closing the profit and loss summary account after a loss was made during the year