Observation

Few candidates attempted this question on Company Accounts and the performance was below average.The expected answers include:

(a)        A company is an association of one or more people called shareholders, registered under theCompanies Code, 1963 (Act 179) for the purpose of carrying on any business that has as its object, the acquisition of gain or profit.   
(for Ghana candidates)

157

                                                                                    OR

A company is an association of people called shareholders, registered under the Companies Act for the purpose of carrying on any business with or without profit motive.              (for other member countries)

(b)        i.          Ordinary shares:
These are shares that do not carry a fixed rate of dividend and would only attract dividend if there is sufficient profit. The holders of these shares bear the highest risk in a company.

ii.         Preference shares:
These are shares that carry a fixed rate of dividend and are given preference over all other shares in the distribution of profits.The
holders bear less risk

iii.        Debentures:
This is a written acknowledgment of the indebtedness of a company that set out the terms and conditions of the loan. Interest is payable on debentures.                        

iv.        Authorised share capital:
This is the maximum amount of capital/shares that can be raised/issued by a company as registeredwith the Registrar of Companies;

v.        Bonus shares:
These are shares issued free of charge to existing ordinary shareholders in proportion to the amount of shares they already hold in the company.