This accounting problem is solved step by step below, with detailed explanations to help you understand the method and arrive at the correct answer.
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QUESTION 1 1.1.1. C 1.1.2. F 1.1.3. D 1.1.4. A 1.1.5. B 1.1.6. E QUESTION 2: COMPANIES' CONCEPTS 2.1.1. Authorised Shares are the maximum number of shares that a company is legally permitted to issue to its shareholders. To calculate the total number of unissued shares: Step 1: Determine the number of issued shares. Issued Shares = Authorised Shares × Percentage Issued Issued Shares = 2,000,000 × 20\% Issued Shares = 2,000,000 × 0.20 Issued Shares = 400,000 Step 2: Calculate the number of unissued shares. Unissued Shares = Authorised Shares - Issued Shares Unissued Shares = 2,000,000 - 400,000 Unissued Shares = 1,600,000 The total number of unissued shares by the end of the financial year will be 1,600,000. 2.1.2. One advantage of listing the company to the Stock Exchange is that it provides easier access to capital for future expansion and growth through public offerings. 2.1.3. Companies should comply with IFRS (International Financial Reporting Standards) when preparing financial statements to ensure comparability and transparency. This allows investors and other stakeholders to easily compare the company's financial performance with other companies globally and make informed decisions. 2.1.4. The repurchase of shares benefits the company in the following ways: • It can increase the earnings per share (EPS), making the company appear more profitable. • It can return surplus cash to shareholders efficiently, especially if the company believes its shares are undervalued. 2.1.5. Retaining profits benefits a company by providing internal funding for future investments and expansion projects without incurring debt or issuing new shares. This strengthens the company's financial position and can lead to long-term growth. 2.1.6. Limited liability means that a shareholder's personal assets are protected from the company's debts and obligations. If the company faces financial difficulties or goes bankrupt, the shareholder's maximum loss is limited to the amount they invested in purchasing the company's shares, and their personal property cannot be seized to pay off company debts.