Topic 7 Company Accounts Review

Practice flashcards covering the definitions of business entities in Malaysia, share capital categories, and company accounting terminology based on the Topic 7 Company Accounts lecture.

Sole Proprietorship

A business entity that is simple to set up, has only 1 owner, and the owner is fully liable for all company debts & liabilities.

Partnership

An entity best for professional firms with at least 2 owners who have unlimited liability.

Limited Liability Partnership (LLP)

A business structure good for start-up & SMEs where the company is a separate legal entity from its members with fewer compliance requirements.

Sendirian Berhad (Sdn Bhd)

A private limited company that is the most common choice for foreign owners, where shareholders are liable for company debts and there must be a resident director, secretary, and office address in Malaysia.

Berhad (Bhd)

A public limited company where shares can be offered to the public, requiring at least 2 directors and having stricter financial reporting requirements.

Branch Office

A structure for foreign owners where the parent company is $100\%$ shareholder and fully liable for the branch's debts.

Companies Act 2016

The legislation that governs limited companies in Malaysia.

Separate legal entity

A legal concept where the business has an existence distinct from that of its members.

Limited liability

A situation where a shareholder’s liability is limited to what they have paid for their shares.

Share

A security which represents a portion of the owner's capital in a business; also commonly referred to as stock.

Directors

The individuals responsible for the running of the business who report on their stewardship at the AGM.

Annual General Meeting (AGM)

A meeting where shareholders hold voting rights, elect directors, and the directors release an annual report.

Authorised share capital

The total of the share capital which the company is allowed to issue to shareholders, also known as registered or nominal share capital.

Issued share capital

The total of the share capital actually issued to shareholders.

Unissued share capital

The amount of authorized capital of the company which has not been allotted and which may be issued anytime.

Subscribed capital

The part of the issued capital that has been accepted by the public.

Called-up Capital

The part of the amounts payable on each share that has been asked for.

Uncalled Capital

The total amount to be received in future which has not yet been asked for.

Paid-up Capital

The total amount of share capital which has been paid by shareholders.

Calls in arrears

The total amount for which payment has been called for but has not yet been paid by shareholders.

Bonus shares

Free shares issued to shareholders without payment, paid for by utilising the company’s reserves.

Preference shares

A category of shares where holders receive an agreed percentage rate of dividend before ordinary shareholders receive anything.

Ordinary shares

A category of shares where holders receive the remainder of profits available for dividends and hold voting rights during the AGM.

Non-cumulative preference shares

Preference shares where, if the dividend paid is less than the maximum agreed amount, the shortage is lost and cannot be carried forward.

Cumulative Preference Shares

Preference shares where any shortage of dividend paid in a year can be carried forward to future years.

Loan notes

A document issued to a lender when a limited company receives money on loan, requiring interest to be paid whether profits are made or not.

Redeemable loan notes

Loan notes that are repayable at a certain date.

Irredeemable loan notes

Loan notes that are repayable only on liquidation.

Corporation tax

A tax charged to net profit to determine the net profit after taxation.

Statement of changes in equity

A statement showing the retained profit, distribution of equity, transfers to reserves, dividends, and a reconciliation of equity components.

Interim dividends

Dividends that have been paid during the year.

Final dividends

Dividends that are unpaid at year end and are shown as a current liability.