Chapter1 Limitedcompany

Limitedcompany ordinarysharecapitalAccount
Definition BAM'd X BManabld X
organisationonneamitsshareholders AllocationAllotment X
seliabilityBlimitedtoitssharecapital Bank X
oflimitedcompany
characteristics Bonusshares X
unlimitedownershipshareholders Shakmomtum
LimitedLiability Balance'ld X Balanabld
Shareholdersreceiveadividendas Bonusshates X Alocationkalotment
theirshareofprofits Bank X
RiskBlimitedtotheamount
investedinshares dividend AllocationAllotment

I I
Limitedcompanynasseparate ordinaryshakcapital
legalentitytoisonners shakmemthm Bank
Musthaveanandithpublishacc
capitalBraBedontheBsneot
shares
Twomaintypesoflimitedcompany Stepstorecordpublishateisne
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Abletoottertheirsharestomembers

ottrepubir ApplicationmoneyReceived
Uk Sharecapital 50,000 DrATA
troshakhodersytrodirectors
PrivateLimitedCompanyLtd ÉmnsEtronkntittooggaryonnavenotyoureceived
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UK atleast9shareholderkdirector Refundtounsuccessfulapplicants
nominrequirementforsharecapital
DrqBqyA AlwaystoratAcountthe
Reserves debitsidemonsinalamount
Twotypesotreserves AllotmentMoneyReceived bestheoscontyrecordsthe
1 Revenuereserves
BEATA
originalamountThe
allotment
createdontotprofitsycanne OSC figuremillbethebalancing
usedtopaydividend TransferFromAtatoosc figure
useofrevenuereserves
ReplacementUNCA
Drabay
Majorrepairwork CallMoniesReceived
ExamplesofRR DrCall
ForeignExchangereserve or OSC
terexchangeratefluctuations or SP
NAReplacementReserve FromCalltooscysp
Transfer
Torplacencamichneedsa
huselumputcash Statementotchangesintanity
GeneralReserve OSC PSC SP CRR GR RE Total
RetainedEarnings OpeningBalance
capitalreserves issheotshares
Hotcreatedontotprotitskcannotrevaluationot
beusedtopaydividend Transferto
ExamplesofcapitalReserves Protitfortheyear
capitalRedemptionreserve DividendPaid
 evan e U
SharePremium
Redemptionolp
TransfertoCRR X x CD
createdmensharesarissued Closingbalance
ataraineovertheirnomina
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usedto
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otaebentures 1 Nominalvaineotshares membersotthecompanynotthememberut
sharesxnominalvaine
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inthetormationotthecompany 2 NpenapershakxHumberot shaminthesoFPE sofpinchunless
mitcoffanyexpensesincurredin Shares are theyareanetor
shareholders
theisneotsharesordebentures Debentures thelastpeopletobe redemptionwithin
shares DefinitionLongtermLoans repaidacompanyause.ch
Characteristics
Definition Dividendsmay tobe
Entitled
Thecapitalotlimitedcompany LongTerm onlybepaidit repaidtist
issplitintosmallunitscalledshares UsuallyRedeemable distributableprofits Interestonaebenta
Fixedrateotinterest
Twotypesofshares areavailable mustbepaideven
Paidbetweanydividends
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stillhastobepaidTheycan
profits
taketheassetsinstedd Mtt Debentureinterest
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panexpense
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Jonmalentries
berepaidfirst redemption purchaseotownshar
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Hasvotingpower y companyispermittedbythecompanie
2Preferenceshares PS O'LongtermSouresForfinance Act1985,10issueredeemableshares
FixedDividendRate 1 Additionalsharesissnedforcash éreasonstoissueredeemableshares
Dividends
arepaidbetoros Advantages 1 surplusofcapital surplusfunds
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LURK reward handsaborethoirparrame the 2 Capitalmaybeneededinthe
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Dr Bank y Thesharesmaybeissuedas enablethecapitaltoberepaid
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U Shaterremium permanentdilutionotthesharecapital raising
unlessthe
sharecapitalastheirshares
ncreasingshalecapital sharesareredeemable arenottradedasstockexchange
1 Bonusissue thereisnorequiremonttorepay investorsinvestinginredeemable
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givedividend whoreitmaybeinconvenient cannotbesoideasily
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requiremoney
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willusecRfirst Highcostotmakinganewissne companiesarepermittedtoredeem

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there animmediate outottheproceedsotanew
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dividend issheotshares
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discounted
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thestockmarket futuredate charsedtosharepreminmaccount
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ubscriberspay donot
shareholders entitledtovotingrights nonskot Redeemedshare
areoriginally
ushares paytorshares dilution ignedatapemium
hecompany'snet Thenetassetsotthe Debenturesinterestreduced Theshalesaretoberedeemed
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Shareholdersdo theirbonus
receive Disadvantages Iseneotshares
othareto
exercise shares Debenturinterestmustbepaidiamountotpreminmlimitedto
beirrishttosubs may
shareholders whetherornotthereisprofit Thepreminmotshalesmen
wthenewshates selltheirbonus Bankloanneedstoberepaid theywereissued
may shaksittheydo
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want them
heydon't debenturesbefore
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X
openinginventory
stuffs
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rossprofit RED factory
otherincomes
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IX Openingwip
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sales
RiveremiseGuesonpietandonlypackstmitspiechickenpie
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office
DiscountAllowed

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interest
statementoffinancialpositionasat
ton currentAssets
PropertyPlant Equipment
Buildings X
Motorvehicles x
Plant machinery x
OfficeEquipment X
Furniture X
Fixtures fittings x x
 I Sblen
Goodwill X
copyright X
Patents X
Trademarks X X
investments
investmentproperty x
shaksinAssociates x x X
unentAssets
nrentories
Rawmaterials x
workinProgress X
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consumables X X
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tradereceivables x
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calledupshalecapitalnotpaid X X
ashkcashtanivalents
cashatbank X
Cashinbank X X
TTALASSETS
equity
y
sharecapital
ordinary
shares x
Preferenceshares x x
Reserves
sharePremium X
RevaluationReserve
capitalRedemptionReserve
NCAReplacementReserve X
GeneralReserve X X
RetainedEarningsDrotitoruss X X
toncurrentLiabilities
LongtermBorrowings
Debentures Loantotes X
BankLoan X
corporationtaxpayablecdependsondate X X
currentLiabilities
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otherpayables X
Aecmedinterest X X
horttermBorrowings
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Bankorerdratt X X
amnttaxPayable
corporationtaxPayable X X
TOTALEQUITY LIABILITIES X
I abl O rectors ep MRP
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g
physicalsubstances reportatasmwhether
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Examples GoodwillPatents
1appointanditosto
thepastyearitgtw
developments properbooksofalcountinghr
Inorderforittobeidentifiable inthefuture
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tromotherpansotthebusiness activitiesofthecompany arinagreementwthebooksot
brinstutureeconomicbenefits Trading thatthecompany
activities account
totheorganisation carriedout soepsirestmeyfairriewot
comefromtwosomes Thenamesotthedirectors the thepositionotthecompanyatthe
1 Theymaybepurchased theyomeshakholdings endoffinancialyear gives
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proposed by mektairviewottheprotitlloss
generatedinternallywithin thecompany fortheperiodcoveredbythead
thebusiness piff.blwybrymarketraineothyB Theaccountshavebeenprepared
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inaccordancewthecompaniesAC
whenapartierleavesapartnership Gallarwentsrelevantacc standard
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effortofexistingpartners Company policyonpaymentotsupplier
anymisleadinginformation
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arerecognisedinaccounting Case
forimportanceofDirectors caseForimportanceotAnditor'sRepo
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mittenottorertheirexpected Report importantpotvaine
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Businesspurchase realisational
ébuyingsellingcompanies AllassetsatOLD x AllliabilitieatOLD
Twotypes value raine
1 Mergers Sundryshakholded NewcompanyCPurchasePriceatHEWX

wheretrosellersmerseintogbiscompany Profit X sundryshareholdersLoss

2AcquisitionTakeover mergers
Acompanybuyinganothercompany
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ordinary X
businesstromsellertobuyerisataprice Realisationtoss x shalebremium X
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affairvalueofbothparties
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statementofcashfions i statementofcashtions IAST
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propyppmopemongushallyx
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 Opeminshelmes Depreadon Ammortisation
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thepurchaseysaleotncagotherlonstem G
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investments
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activities cashtromusedinoperations X
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asitsivesdetailsaboutcashinkouthons A Interestreceived X
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theyear
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highlightsMetherthecompanynasincreasedChesatstantottheyear X
its loansandmetherthoseloansmeretakencycsatendottheyear x
totinanancAforthetutureordaytoday term
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maninscostsladangerstn iliquidityproblemstesultin knotprofitablebusinesswould
highlightschansesinthesharecapital structure unabletopaydailybills aosedowninthelongrun
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hthIThthonnellthebusinessimanagingits resultinclosureotbusinessighsonnesalearailableassonkeottina
cashresources Businessunabletooperatelt inollomprofitabilitymayresuttint
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positionotthebusinesswotherinvestment écanshwiveshorttermlossesit i Hollowprofitabilitymayseesha
opportunities previousprotitshrbeenbuiltup Prefallasinvestorsloseconfiden
conclusion Mustacusonbothasbothdleimportant
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statementsforshareholdersbother
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interestedparties accurate
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give
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bepublished monthsafterfinancialyeartheycorerended throushtheyear
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companydifferentaccountingpolicies
mayhavechanged willaffect thecompany'sperformance
 ApyramidofRatios
Incomestatementystatementoffinancialposition

Profitability Ratios
showing investment
Ratios Utilisationofresources ratios
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theamountinvested
aretumoncapitalemployedarevennetonca Financial
tignignesIio
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assessmentofacompany'sprospects
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 dicale P I real 9
profitstorintureexpansionlongtermbenefits
marginalcosting breakEvenAnalysis
écostingmethodthatonlyconsidersmarginalcosts Breakevenpoint units
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materialslabour Contribution
per sellingprice variablecostporani
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considering whethertomakeorbuyaproduct Fixedcosts BEPXsellingprice
of
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Abusinessnasalimitingtactorthatrestrictsits contribution
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directlyassociatedtothe Maginotsafetyunits 190 emos
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producedduringtheperiodisassumed DirectExpenses X furthercontributiontocover
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costbehaviourBassumedtobe Marsinalcostofsales X layingoffa skilledworkforce
eitherfixedorvariable Otherfixedexpenses duringaperiodofpoor trading
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forthewholeperiodtimeHosteppedcost todisposeofslowmovingor
variablecostsareassumedtobe specialorder redundant
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perfectlylinearwthelevelotproduction 2oriteria sellingpricemustexceedthemarsina
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considered 1specialorderprice variable
cost costofproduction
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thequantityofgoodsthata Directmaterialspemnit

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usesbenefits limitationsofmarginallosing I goof
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Budget Budgetarycontrol ifactorstoneconsideredmbudseting

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overatnthreperiodottime Principalbndsetorlimitingtactor
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planstoroperatingabusinessorerathture oteachgradeotembloyee
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budgetsprepared Budsetformalisemanagementplans
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budget Budsetpreparationensuresthatallfunctions of
costcentres productiondepartment abusinessareproperlycoordinated
profitantresidepartmentotastore Budgetmayindicatepossible futureshortagesof
operatingBudgetBudgetspreparedforeachindividual resourcessoremedial actioncouldbetoken
department time orothertunctionalbudsets modified
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figures Preparationotbudsettorindividualdepartments
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manasebasainsttheirfunctionalbudset ofbusinessactivities
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by
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tocoordinatethepleparationotbudsets motivation Tomotiratemanasers Typesoffunctionalbudget
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budget cashbud
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 Bdk ah B d se s se
salesBudget Octal Q2 uproductionbudset
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salesbudsettorthethndsetperiod
Period't PeriodsPeriods pg pz pz
salesunit 11200 11400 11500 Sales 11200 1140 11500
salesvalue 120,000 140,00011501000 openinginventory 1480 560 150
inventoryrestricted 560
closing 580 560
Production 11280 11420 11480
unitsotproduction sales OItCI
stabourbudset repurchasesbudget
LabourBudget Purchases
Budget
PA D2 P3 PI D2 P
Production units soo aw too productionunits 11280 11420 11480
LabourRequiredCha 4,8W 5,4004mn materialcos 381400 42,601441400
Labourcost 38,400 43,201331600
surplushours soo soo
shortfallhours 400

NTRUndset Md
budget TPhndset
P1 D2 Db y y py
Balanabld 125100013610001601000 Balandbld 221500291300371710
credit
sales 96,00011210001201000 Creditpurchases 28180031195033,300
Receipts Payments
Creditsalestromprevperiod 140,0007148100156100 Credithurchasestromprevperiod 4810001231040712515603
Creditsalestrom2periodbetor 35,0003140100714810N creditpurchases
frontroperiods
debt
Irrecoverable 110,000 before 1410W 415007151760
Balanacld 66,000 160,000170100 Balanced 29130037710391690

Benefits cashbudset Limitations NashBndset

Allcashresourcesare replaced
restrictions cashBudget
controlledtoavoid onexpenditurelack Receipts P1 D2 B
overdrattsorsurpins ottundstornnexpected Booksales 900 650 600
cashbeingheld activity lossutpntit Loan 400
Allcashexpenditurecan Toohighdemotivate A TotalReceipts 11300650 600
beplanned thestaff Payments
coordination'ecommunicationetoolwistattoreypend Purchasescash 38 57 76
Jensuredblwalldepts Glashpwasted purchasescredit 180 160 240
Performance
canbemonitored Assistant'swages
60 60 60
crendrattsyinterestchaises Rent no
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anteavoided 120 120 120
cashtagetsanachieved loanRepayment 50 50
stattonemotiated Drawings 300 300 300
B TotalPAYMENT 898 747 846
MasterBudget Basically SOFPYSOPLCIS ABHetcashflow 402 197 6246
wpredictedfigure Balanabroughtforward 280 682 585
Balancecarriedtoward 682 585 339
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Total Labouvrariancettotalmaterialvariance Page140

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recognisesthetimeraineotmoney 4 800 0.552 41416
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