Accounting 9706 · AS & A Level · Preparation of financial statements
Preparation of financial statements — practice question
An excerpt from J Limited’s statement of financial position at 1 January 2022 is included, together with further details on a rights issue, a possible debenture issue, dividends, and the year’s profit.
(a)[2]
State two characteristics of revenue reserves that are not true of capital reserves.
(b)[3]
Calculate the sum raised by the share rights issue.
(c)[2]
Identify two reasons why the directors of J Limited may prefer to obtain extra finance through a rights issue rather than by issuing debentures.
(d)[2]
Calculate the total interim dividend amount.
(e)[6]
Prepare the statement of changes in equity for the year ended 31 December 2022.
Worked solution & mark scheme
This 15-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Revenue reserves may be used to finance dividends” …