JAMB Accounts Principles of Accounts 2010 Paper

Concept:Authorized share capital is the total nominal value of the shares a company is permitted to issue. Capital reserves and long-term liabilities are not part of share capital.Explanation:Value of preference shares $= 6{,}000{,}000 \times 0.50 = \mathrm{N}3{,}000{,}000$.Value of ordinary shares $= 6{,}000{,}000 \times 1 = \mathrm{N}6{,}000{,}000$.Add the two values to get the authorized share capital.Authorized share capital $= \mathrm{N}3{,}000{,}000 + \mathrm{N}6{,}000{,}000$.Authorized share capital $= \mathrm{N}9{,}000{,}000$.Capital reserves and long-term liabilities should not be added to share capital.Answer:C. $\mathrm{N}9{,}000{,}000$