Paid-Up Share Capital

### What is paid-up share capital? - [x] The portion of issued share capital that has been fully paid by shareholders. - [ ] The amount of capital a company is authorized to raise. - [ ] The unpaid portion of issued shares. - [ ] Equity that has not yet been issued. > **Explanation:** Paid-up share capital refers to the portion of issued share capital for which shareholders have made full payment. ### If a company has issued share capital of $500,000, and 80% has been paid, what is the paid-up share capital? - [x] $400,000 - [ ] $500,000 - [ ] $100,000 - [ ] $600,000 > **Explanation:** The paid-up share capital is $500,000 * 80% = $400,000. ### What would fully paid shares indicate? - [x] That the shareholders have fully paid the par or nominal value of the shares. - [ ] That the company has issued new shares. - [ ] That the shares are about to be issued. - [ ] That the shares have been partially paid. > **Explanation:** Fully paid shares mean that shareholders have paid the full amount for the shares issued by the company. ### What options does a company have if shareholders do not fully pay for their shares? - [x] Enforce payment of the outstanding amount. - [ ] Issue more shares to cover the deficit. - [ ] Delete the outstanding balance. - [ ] Increase the par value of shares. > **Explanation:** The company has the option to enforce payment of the outstanding amount to cover the unpaid share capital. ### Can a company have paid-up share capital and issued share capital at the same time? - [x] Yes, because paid-up share capital is derived from issued share capital. - [ ] No, they cannot coexist. - [ ] Yes, but only in private companies. - [ ] Only during the initial public offering. > **Explanation:** Paid-up share capital is a portion of issued share capital for which payment has been received, hence they can coexist. ### What is the relationship between called-up share capital and paid-up share capital? - [x] Paid-up share capital is part of called-up share capital that has been paid in full. - [ ] Called-up share capital is part of unpaid share capital. - [ ] They are unrelated terms. - [ ] Called-up share capital is higher than paid-up share capital always. > **Explanation:** Paid-up share capital is the part of called-up share capital that has been completely paid. ### When assessing a company's financial health, why is paid-up share capital significant? - [x] It indicates the actual cash in hand from equity financing. - [ ] It shows the future potential earnings capacity. - [ ] It predicts stock market performance. - [ ] It directly affects the company's liabilities. > **Explanation:** Paid-up share capital is significant as it shows the actual cash inflow from shareholders, contributing to the company's equity base. ### What portion of issued share capital does paid-up share capital represent? - [x] Only the part that has been fully paid for by shareholders. - [ ] The entire issued share capital. - [ ] Only the part that is yet to be paid by shareholders. - [ ] The difference between issued and called-up share capital. > **Explanation:** Paid-up share capital represents the portion of issued share capital that has been fully paid by shareholders. ### Which of the following correctly compares called-up share capital to paid-up share capital? - [x] Called-up share capital includes all issued share capital that has been requested for payment; paid-up share capital is only the fully paid portion. - [ ] Called-up share capital is always lower than issued share capital, whereas paid-up capital can be higher. - [ ] Paid-up share capital includes unpaid shares not yet called for payment. - [ ] Issued share capital and paid-up share capital are interchangeable terms. > **Explanation:** Called-up share capital is the amount requested for payment from shareholders, while paid-up share capital is the amount that has actually been paid. ### Which financial statement reflects paid-up share capital? - [x] The balance sheet under shareholders' equity. - [ ] The income statement under revenue. - [ ] The cash flow statement under cash from investing activities. - [ ] The statement of retained earnings. > **Explanation:** Paid-up share capital is found in the balance sheet under shareholders' equity.