The issued capital of a company is:

a) Always the same as the authorised capital

b) The same as preference share capital

c) Equal to the reserves of the company

d) None of the above

(choice one answer on the above)

1 Answer

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  • 1 decade ago
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    The answer is - (d) None of the above.

    a) Always the same as the authorized capital

    Authorized shares is the maximum number of shares a company can issue. The amount of issued capital/shares can be all or part of the total amount of authorized shares of a company. So, it’s not ALWAYS the same as the authorized capital.

    b) The same as preference share capital

    There’re preference and ordinary shares.

    c) Equal to the reserves of the company

    Reserves is portion of the earnings that is used for specific purpose. When your company makes a loan, the creditor may request the company to maintain a reserve to certain level for financial ratio calculations in order to secure the loan. So, this is not related to the issued capital of a company.

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