Slide 45.1 Wood and Sangster, Frank Wood's Business Accounting Volume 1 Power Points on the Web, 11 th Edition © Pearson Education Limited 2008 Public.

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Slide 45.1 Wood and Sangster, Frank Wood's Business Accounting Volume 1 Power Points on the Web, 11 th 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, 11 th 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, 11 th Edition © Pearson Education Limited 2008 Main types of shares Preference sharesHolders of these shares get an agreed percentage rate of dividend before the ordinary shareholders receive anything. Ordinary sharesHolders 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, 11 th Edition © Pearson Education Limited 2008 Types of preference shares Non-cumulativeThese 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. CumulativeThese 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, 11 th 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, 11 th 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, 11 th 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, 11 th 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.