Page 70 - Ebook Financial Accounting 3

Unique Terms of A Limited Company

• Expenses incurred in the setting up of a company.
• Example: lawyer’s fees for preparing M&A, registration fees,
Preliminary Expenses
cost of issuing shares.
• It is to be treated as administrative expenses.

• Is same as loan interest.
Debentures Interest • It is paid for borrowed money and, it’s to be treated as a financial
expenses.

Directors’ • Amount received by directors from their office.
Remuneration • It is to be charged under administrative expenses.

• The amount payable to an auditor for an audit.
Audit Fees
• It has be approved at the AGM of a company.

• Dividends are divided into two types, preference share dividend
and ordinary share dividend.
Dividends
• Preference shareholders entitled to receive dividend at a fixed
rate for which company has made a profit.

• The final balance in the Statement of Changes in Equity after
Unappropriated making all necessary appropriations.
Profits • It also called Retained Earning Ending, Retained Profit Endings
or P/L Ending.

• Is an intangible asset reflecting the customer connections and
Goodwill
reputation of a business

Figure 4.2

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