Limited companies — Paper 1 · IGCSE Accounting (9-1) 0985

25 Which item is shown in the income statement of a company and statement of changes in equity? A interest on debentures accrued B ordinary share dividend paid C profit for the year D transfer to general reserve

1 marks

Answer: C

This question in 0985/11 May/June 2020

24 The statement of financial position of X Limited at 31 December 2018 included the following: $ ordinary share capital 40 000 general reserve 8 000 retained earnings 65 000 8% debentures (repayable 2025) 30 000 Profit for the year ended 31 December 2019 was $42 000 and dividends paid totalled $10 000. What was the total equity on 31 December 2019? A $137 000 B $145 000 C $155 000 D $175 000

1 marks

Answer: B

This question in 0985/12 May/June 2020

25 Which is a feature of debentures? A are a long-term liability of a company B carry a fixed rate of dividend C carry voting rights D on liquidation are paid back after shareholders

1 marks

Answer: A

This question in 0985/12 May/June 2020

31 AB Limited and CD Limited both started business on 1 January 2019 with an ordinary share capital of $100 000. Neither company had any debentures or loans. Both companies had the same profit in 2019. Only AB Limited paid a dividend. The return on capital employed (ROCE) was calculated using closing capital employed. Which statement about AB Limited’s ROCE is correct when compared to that of CD Limited? A It is higher because the dividend reduced retained earnings. B It is lower because the dividend reduced capital employed. C It is lower because the dividend reduced the profit for the year. D It is the same as that of CD Limited.

1 marks

Answer: A

This question in 0985/12 Oct/Nov 2020

22 X Limited started the year with an ordinary share capital of $100 000. An ordinary share dividend of $3000 was paid during the year. Later a further $10 000 of ordinary shares were issued. The profit for the year was $8000. By how much had equity increased at the end of the year? A $7000 B $10 000 C $15 000 D $18 000

1 marks

Answer: C

This question in 0985/11 May/June 2021

23 Which providers of funds to a limited liability company receive a fixed rate of return on their investment? ordinary preference debenture shareholders shareholders holders A Jv J Jv B Jv x Jv Cc x J Jv D x Jv x

1 marks

Answer: C

This question in 0985/11 May/June 2021

22 James is an accountant and operates as a sole trader. Which items would not appear in his statement of financial position? 1 long-term loan 2 retained earnings 3 trade payables A 1 and 2 B 1 and 3 C 2 only D 2 and 3

1 marks

Answer: D

This question in 0985/12 May/June 2021

23 BCD Limited provided the following information. $ ordinary shares 300 000 retained earnings 200 000 debentures 170 000 How much was the equity and the capital employed? equity capital employed $ $ A 300 000 470 000 B 300 000 670 000 C 500 000 470 000 D 500 000 670 000

1 marks

Answer: D

This question in 0985/12 Oct/Nov 2021

24 The issued share capital of CD Limited consists of ordinary shares. Retained earnings were $86 000 on 1 September 2020 and $88 500 on 31 August 2021. The company made a profit during the year of $26 000 and made a transfer to general reserve of $5000. What was the total ordinary share dividend paid during the year? A $18 500 B $23 500 C $28 500 D $33 500

1 marks

Answer: A

This question in 0985/12 Oct/Nov 2021

25 A limited company raised funds from an issue of debentures. Which statement is correct? A The debentures are part of the equity of the company. B The debenture holders cannot vote at the annual general meeting. C The debenture holders are repaid only if the company is wound up. D The debenture interest is paid only if the company earns a profit.

1 marks

Answer: B

This question in 0985/11 May/June 2022

26 A limited company provided the following information. $ total equity on 1 January 2021 500 000 ordinary share dividend paid 30 June 2021 25 000 transfer to general reserve on 31 December 2021 12 000 total equity on 31 December 2021 558 000 What was the profit for the year? A $46 000 B $58 000 C $83 000 D $95 000

1 marks

Answer: C

This question in 0985/11 May/June 2022

20 Which statements are correct? 1 A debenture holder of a limited company is liable for the debts of the company. 2 A partner is liable to pay business debts from personal assets. 3 A shareholder of a limited company is responsible for the company’s debts. 4 A sole trader is responsible for all the debts of his business. A 1 and 2 B 1 and 3 C 2 and 4 D 3 and 4

1 marks

Answer: C

This question in 0985/12 May/June 2022

21 The draft financial statements of a limited company showed retained earnings of $31 820. It was then found that no adjustment had been made for the following. $ commission receivable accrued 450 insurance prepaid 175 What was the correct amount of the retained earnings? A $31 195 B $31 545 C $32 095 D $32 445

1 marks

Answer: D

This question in 0985/12 May/June 2022

20 Members of a limited company have limited liability for the debts of that company. What does this mean? A Members are equally liable for the debts of the company. B Members are liable only up to the value of their personal assets. C Members are liable only up to the amount they agree to pay for their shares in the company. D Members are liable only up to the value of the debentures they hold in the company.

1 marks

Answer: C

This question in 0985/12 Oct/Nov 2022

21 A limited company provided the following information. $ non-current assets 35 000 ordinary share capital 40 000 5% debentures 10 000 net current assets 30 000 What were the retained earnings? A $15 000 B $25 000 C $55 000 D $115 000

1 marks

Answer: A

This question in 0985/12 Oct/Nov 2022

22 What is included in the equity of a limited company? ordinary retained general : debentures share capital earnings reserve A v v v B v v Cc v v v D v v

1 marks

Answer: A

This question in 0985/12 Oct/Nov 2022

25 What is an advantage of being a member of a limited company? A Loan capital is easy to obtain. B Dividends must be paid to the member. C Financial statements are prepared quickly. D The company is a separate legal entity.

1 marks

Answer: D

This question in 0985/11 May/June 2023

26 A limited company provided the following information. $ issued share capital (50 000 ordinary shares of $1 each) 50 000 profit for the year ended 31 December 2022 13 000 transfer to general reserve during the year 6 000 interim ordinary share dividend paid during the year 3 000 On 31 December 2022, it was decided to use the remaining profit to pay a final ordinary share dividend. Which percentage final dividend would the ordinary shareholders receive? A 8% B 14% C 20% D 26%

1 marks

Answer: A

This question in 0985/11 May/June 2023

25 What is meant by the term equity? A dividend paid to ordinary shareholders B funds raised through borrowing C interest paid to debenture holders D total funds provided by shareholders

1 marks

Answer: D

This question in 0985/12 May/June 2023

26 During the financial year, AB Limited paid debenture interest of $1400 relating to that financial year. At the end of the year, debenture interest of $700 was accrued. How was debenture interest shown in the financial statements for the year? income statement of statement changes in equity $ $ A 1400 no entry B 2100 no entry C no entry 1400 D no entry 2100

1 marks

Answer: B

This question in 0985/12 May/June 2023

24 Which organisation is the most difficult to establish and has to comply with many legal formalities? A partnership B sole trader C limited liability company D club or society

1 marks

Answer: C

This question in 0985/12 Oct/Nov 2023

25 Z Limited has the following types of equity and liabilities. 1 debentures 2 general reserves 3 long-term bank loan 4 ordinary share capital 5 preference share capital (non-redeemable) 6 retained earnings What is included in the company’s shareholders’ equity? A 1, 2, 4 and 5 B 1, 3, 4 and 5 C 2, 3, 4 and 6 D 2, 4, 5 and 6

1 marks

Answer: D

This question in 0985/12 Oct/Nov 2023

24 A company supplied the following information. $ issued and paid up share capital 300000 general reserve 45000 long-term bank loan 8000 retained earnings 35000 6% debentures 25000 What is the total equity? A $335000 B $345000 C $380000 D $413000

1 marks

Answer: C

This question in 0985/11 May/June 2024

25 Which apply to both debentures and preference shares? included in no voting fixed rate of capital rights return employed A ✓ ✓ ✓ B ✓ ✗ ✓ C ✗ ✓ ✗ D ✗ ✗ ✗

1 marks

Answer: A

This question in 0985/11 May/June 2024

23 T Limited was formed on 1 April 2019. A total of 220 000 shares of $2 each were issued and shareholders were asked to pay 75% of the share value immediately and 25% on 1 April 2020. By 1 June 2019 holders of 190 000 shares had paid the amount due. What was the paid up capital on 1 June 2019? A $ 285 000 B $330 000 C $380 000 D $440 000

1 marks

Answer: A

This question in 0985/12 May/June 2024

24 Which items would appear in the statement of changes in equity of X Limited for the year ended 30 June 2020? 1. interim dividend paid on 31 March 2020 2. proposed dividend for the year ended 30 June 2020 3. proposed final dividend for the year ended 30 June 2019 paid on 31 October 2019 4. transfer to general reserve on 30 June 2020 A 1, 3 and 4 B 1 and 3 only C 2, 3 and 4 D 2 and 4 only

1 marks

Answer: A

This question in 0985/12 May/June 2024

24 X Limited provided the following information. $ ordinary share capital 300000 general reserve 50000 retained earnings 35000 8% debenture 60000 What was the total of the equity? A $335000 B $350000 C $385000 D $445000

1 marks

Answer: C

This question in 0985/12 Oct/Nov 2024

25 Which item is shown in the income statement and in the statement of changes in equity of a limited company? A accrued interest on debentures B ordinary share dividend paid C profit for the year D transfer to general reserve

1 marks

Answer: C

This question in 0985/12 Oct/Nov 2024

24 R Limited provided the following information. $ At 1 January 2024 ordinary share capital 350000 retained earnings 46000 general reserve 37000 For year ended 31 December 2024 profit for the year 32000 dividends paid 20000 What was the value of total equity at the end of the year? A $408000 B $428000 C $445000 D $465000

1 marks

Answer: C

This question in 0985/11 May/June 2025

23 What are the advantages to shareholders of operating as a limited company? 1 It has a separate legal identity. 2 It makes it easier to prepare financial statements. 3 It makes it quicker to prepare financial statements. 4 It protects personal assets. A 1, 2, 3 and 4 B 1 and 2 only C 1 and 4 only D 2, 3 and 4 only

1 marks

Answer: C

This question in 0985/12 May/June 2025