QUESTION 2: COMPANIES' CONCEPTS 2.1.1. Authorised Shares are the maximum number of shares that a company is legally allowed to issue to its shareholders. To calculate the total number of unissued shares: Step 1: Determine the number of issued shares. $$ \text{Issued Shares} = \text{Authorised Shares} \times \text{Percentage Issued} $$ $$ \text{Issued Shares} = 2,000,000 \times 20\% $$ $$ \text{Issued Shares} = 2,000,000 \times 0.20 $$ $$ \text{Issued Shares} = 400,000 $$ Step 2: Calculate the number of unissued shares. $$ \text{Unissued Shares} = \text{Authorised Shares} - \text{Issued Shares} $$ $$ \text{Unissued Shares} = 2,000,000 - 400,000 $$ $$ \text{Unissued Shares} = \boxed{1,600,000} $$ 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 helps the company get money easily from many investors to grow. 2.1.3. Companies should comply with IFRS (International Financial Reporting Standards) when preparing financial statements to ensure comparability and transparency. This makes financial statements clear and easy to compare with other companies, helping investors make good choices. 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 per share. • It can return extra cash to shareholders if the company has surplus funds and no better investment opportunities. 2.1.5. Retaining profits benefits a company by providing internal funding for future investments and expansion projects without needing to borrow money or issue new shares. 2.1.6. Limited liability means that if a company owes money or goes bankrupt, the owners (shareholders) only lose the money they invested in the shares. Their personal belongings, like their house or car, are safe and cannot be taken to pay the company's debts.