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Acc 6

Preference shares are repayable at par value in a winding up and rank above ordinary shareholders. Capital owned refers to total assets belonging to the business owner, while capital employed is total assets minus current liabilities. Liquidity, profitability, and efficiency ratios measure a business's ability to meet short-term debts, generate profits, and maximize output, respectively.

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5 views1 page

Acc 6

Preference shares are repayable at par value in a winding up and rank above ordinary shareholders. Capital owned refers to total assets belonging to the business owner, while capital employed is total assets minus current liabilities. Liquidity, profitability, and efficiency ratios measure a business's ability to meet short-term debts, generate profits, and maximize output, respectively.

Uploaded by

Pei Ting
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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3.

In the event of a winding up, preference shares are usually repayable at par
value, and rank above the claims of ordinary shareholders (but behind bank and
trade creditors).
- Preference shares may be issued with the right of conversion into ordinary
shares. These are called convertibles.

18- Capital owned &Capital employed.


 Capital owned : The amount and other resources employed in the business which
belong to the owner of the business .( Total assets )
 Capital employed: Total assets less current liabilities. ( capital + non- current
liabilities )

19- Current Ratio & quick Ratio


 Current Ratio : How many times our Current assets cover our Current liabilities
 quick Ratio : : How many times our Current assets cover our Current liabilities
without stock

20- Liquidity ratios & profitability ratios & Efficiency ratios


 Liquidity ratios : Ability of the business to pay its short-term debts whenever due
and to continue its day-to-day operations.
 Profitability ratios : Ability of the firm to generate profits using its available
resources.
 Efficiency ratios : Ability to maximize output from a given input.

21- Statement of financial position & Income Statement


 Statement of financial position : final account prepared to measure the final
position of the business at the end of each financial year at the specific date
 Income Statement : Final account prepared to show either “ Net Profit “ or “ Net
Loss” made by the business at the end of each financial year during the period.

22- Trade discount & cash discount


 Trade discount : A reduction given by the supplier to the customer for bulk
purchases. Are not shown in the double entry account only appear in the invoice
And are deducted from the list price of the goods when recording in the day
book.
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