Unit 16: Limited Liability Companies

Adv	Disadv
Ø  __ liability Ø  Raise capital via __ Ø  C__ Ø  ↑access to f__

limited, shares, continuity, finance

Adv	Disadv
	Ø  Hard to maintain c__ Ø  D__ of scale (communication) Ø  More r__ & legal req. to follow

control, diseconomies, rules

Sources of finance:
1. P__ shares
> paid __ (1st/2nd), cant vote in __

preference, 1st, AGM

Sources of finance:
2. O__ shares
> paid __ (1st/2nd), no guaranteed r__, has v__ rights, ez to buy

ordinary, 2nd, returns, voting

Sources of finance:
3. L__ c__ (debentures; NCL)
> l__ received from other businesses
> paid __ everything else
> fixed __ rate

loan capital, loan, before, int

Income Appropriation Account
Ø  Sets aside some profit for f__ long-term operations e.g. general reserve
Ø  Distributes p__ to s__ (ordinary, preference)
Ø  R__ profit in the business

future, profit, shareholders, retains

Income and Appropriation Account for the year ended

	$	$
Gross p__		x
Less: Selling expenses	x
Administration expenses	x	(xx)
Profit for the y__		xx
__: T__ t__ __ __
I__ preference share dividend paid	x
Final preference share dividend paid	x
Interim o__ share dividend paid	x
Final ordinary share dividend paid	x	(xx)
R__ p__ for the year		xx
__: R__ e__ opening balance		xx
Retained earnings closing balance		xxx

profit, year, less: transfer to general reserve, interim, ordinary, retained profit, add: retained earnings

D__ are paid to s__ as a r__ for the r__ taken in investing in shares

dividends, shareholders, reward, risk

I__ dividends are paid part way thru the year so shareholders have some i__

interim, income

Profit for the year ended was $86 000. Which letters are affected?

	Share Capital $	General Reserve $	Retained Profits $	Total $
Balance at 1 May 2014	100 000	20 000	14 000	134 000
Profit for the year	A	B	C	D

c, d

$50 000 is transferred to the general reserve. Which letters are affected? Include brackets if necessary

	Share Capital $	General Reserve $	Retained Profits $	Total $
Balance at 1 May 2014	100 000	20 000	14 000	134 000
Transfer to general reserve	A	B	C	D

b, (c), d

$50 000 is transferred to the general reserve. What is the total $$?

	Share Capital $	General Reserve $	Retained Profits $	Total $
Balance at 1 May 2014	100 000	20 000	14 000	134 000
Transfer to general reserve		x	(x)	????????

0

Interim dividend paid was $3 000. Which letters are affected? Include brackets if necessary

	Share Capital $	General Reserve $	Retained Profits $	Total $
Balance at 1 May 2014	100 000	20 000	14 000	134 000
Dividend paid (intm)	A	B	C	D

(c), (d)