1 / 10

Topic 7

Topic 7. Accounting for Equity. Financial Statement of Sole Trader. Presentation of equity in the balance sheet Example: Kingslee Enterprise Balance Sheet (partial) at December 31, 2007. Financial Statement of Partnership. Presentation of equity in the balance sheet

grazia
Download Presentation

Topic 7

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Topic 7 Accounting for Equity

  2. Financial Statement of Sole Trader • Presentation of equity in the balance sheet Example: Kingslee Enterprise Balance Sheet (partial) at December 31, 2007

  3. Financial Statement of Partnership • Presentation of equity in the balance sheet Example: R & R Photography Balance Sheet (partial) at December 31, 2007

  4. Financial Statement of Partnership • Presentation of equity in the balance sheet Example: LaReez Bistro Balance Sheet (partial) at December 31, 2007

  5. Financial Statement of Partnership (cont’d) Notes to account: (partial) Note 10: LaReez Bistro Statement of Owners’ Equity at December 31, 2007

  6. Financial Statement of Corporation • Presentation of equity in the balance sheet Example: Frost Corporation Balance Sheet (partial) at December 31, 2007

  7. 1. Preference shares / preferred stocks - the shareholders get an agreed rate of dividend before the ordinary shareholders receive anything. 2. Ordinary shares / common stocks - the shareholders receive the remainder of the total profits appropriated for dividends. Exhibit 7-1: A company had 10,000 5% preference shares of RM1 each and 20,000 ordinary shares of RM1 each. The profits available for dividends are: Year 1 RM900, Year 2 RM1,300, Year 3 RM1,600, Year 4 RM3,100, and Year 5 RM2,000.

  8. Non-cumulative preference shares • - the shareholders receive up to an agreed percentage each year. If the amount paid is less than the maximum agreed amount, the shortfall is lost by the shareholders. The shortfall cannot be carried forward and paid in a future year. • 4. Cumulative preference shares • - the shareholders have an agreed maximum percentage dividend, and any shortfall of dividend paid in a year can be carried forward.

  9. Exhibit 7-2: A company has 50,000 ordinary shares of RM1 each and 20,000 5% non-cumulative preference shares of RM1 each. The profits available for dividends are: Year 1 RM1,500, Year 2 RM800, Year 3 RM2,500, Year 4 RM600, and Year 5 RM5,000.

  10. Exhibit 7-3: Assume the preference shares in Exhibit 7-2 are cumulative preference shares. The dividends for preference shares and ordinary shares are as follows: • Authorized share capital • - the total of the share capital which the company is allowed to issue to shareholders. • - also known as registered capital or nominal capital. • Issued share capital • - the total of the share capital actually issued to shareholders.

More Related