CIE Accounting Paper-1: Specimen Questions 135 - 137 of 214

Question number: 135

Short Answer Question▾

Write in Short

Explain ordinary shares:

Explanation

The share capitals of the limited company are classified as ordinary shares and preference share capital. The main features of ordinary share capital are:

  • No fixed rate of dividend on profit or loss.
  • The ordinary shareholders have voting rights while taking decision.
  • Ordinary shares also known as equity shares.
shows image is type of shares

shows image is type of shares

image of type of shares

Question number: 136

MCQ▾

Question

Which one of the following is revenue expenditure in nature?

Choices

Choice (4) Response
a.

Paid for repairs on second hand machinery

b.

Second hand car purchased

c.

Debentures are issued for raising loan.

d.

Paid carriage on goods purchased

Answer

d.

Explanation

The capital expenditures are those expenditures on which the benefits are carried over to several accounting periods. The revenue expenditure is those expenditures which occurred in the normal course of the business.

Question number: 137

Short Answer Question▾

Write in Short

Calculate the preference dividend when limited company issued 2000 number of Preference Shares with a cost of $2 per each share. The dividend rate is fixed at 5 % per year.

Explanation

$200

Dividend is usually calculated on the total value of preference share of the limited company. Hence, preference dividend is Dividendpaideachyear=TotalvalueofPreferenceShare×Dividendrate

Dividendpaideachyearis$4, 000×5%=$200

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