Slide 45.1

Wood and Sangster, Frank Wood's Business Accounting Volume 1 Power Points on the Web, 11th Edition © Pearson Education Limited 2008

Public limited companies

A public limited company must fulfil the following conditions:

• Its memorandum must state that it is a public limited company.

• Authorised share capital is at least £50,000.• Minimum membership is one (there is no

maximum).• Its name must end in ‘public limited company’

or ‘plc’.

Slide 45.2

Wood and Sangster, Frank Wood's Business Accounting Volume 1 Power Points on the Web, 11th Edition © Pearson Education Limited 2008

Private limited companies

The main differences between a public and a private limited company are that a private company:

• Can have an authorised share capital of less than £50,000.

• Cannot offer its shares for subscription to the public at large.

Slide 45.3

Wood and Sangster, Frank Wood's Business Accounting Volume 1 Power Points on the Web, 11th Edition © Pearson Education Limited 2008

Main types of shares

Preference shares Holders of these shares get an agreed percentage rate of dividend before the ordinary shareholders receive anything.

Ordinary shares Holders of these shares receive the remainder of the total profits

available for dividends. There is no upper limit to the amounts they can receive.

Slide 45.4

Wood and Sangster, Frank Wood's Business Accounting Volume 1 Power Points on the Web, 11th Edition © Pearson Education Limited 2008

Types of preference shares

Non-cumulative These can receive a dividend up to an agreed percentage each

year. If the amount paid is less than the maximum agreed amount, then the shortfall is lost by the shareholder.

Cumulative These also have an agreed maximum percentage dividend. However, any shortfall of dividends

paid in a year can be carried forward.

Slide 45.5

Wood and Sangster, Frank Wood's Business Accounting Volume 1 Power Points on the Web, 11th Edition © Pearson Education Limited 2008

Different types of share capital

• Authorised share capital• Issued share capital• Called-up capital• Uncalled capital• Calls in arrears• Paid-up capital

Slide 45.6

Wood and Sangster, Frank Wood's Business Accounting Volume 1 Power Points on the Web, 11th Edition © Pearson Education Limited 2008

Loan notes

The term loan note is used when a limited company receives money on loan, and certificates are issued to the lender. A loan note may be either:

• Redeemable – i.e. repayable by a particular date.• Irredeemable – normally repayable only when

the company goes into liquidation.

Slide 45.7

Wood and Sangster, Frank Wood's Business Accounting Volume 1 Power Points on the Web, 11th Edition © Pearson Education Limited 2008

The appropriation account

Debit side

Transfers to reserves

Amounts written off goodwill

Preliminary expenses

Taxation on profits

Dividends

Balance c/f to next year

Credit side

Net profit for the year

Balance b/f for year

Slide 45.8

Wood and Sangster, Frank Wood's Business Accounting Volume 1 Power Points on the Web, 11th Edition © Pearson Education Limited 2008

The Audit Report

The auditor must consider whether:

• The accounts have been prepared in accordance with the Companies Act.

• The balance sheet shows a true and fair view of the state of the company's affairs.

• Proper accounting records have been kept.• The accounts are in agreement with the

accounting records.• The director’s report is consistent with the

accounts.