Accounting 9706 · AS & A Level · Preparation of financial statements

Preparation of financial statements — practice question

A company allocates $100000$ new $1 ordinary shares at a premium of $0.20 per share. What impact does this have on the statement of financial position?

  • AEquity increases by the nominal value of the shares but decreases by the value of the premium.
  • BEquity increases by the nominal value of the shares only.
  • CNet assets increase by the nominal value of the shares plus the value of the premium.
  • DNet assets increase by the nominal value of the shares but decrease by the value of the premium.

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