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QUESTION 3 You are the Financial Consultant of Eyes2Eyes Group and the Managing Director have...

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Accounting

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QUESTION 3 You are the Financial Consultant of Eyes2Eyes Group and the Managing Director have referred to you a confused client Mr Bowen, who is a newly converted businessman who was previously a carpenter. a) He would like you to elaborate between two types of qualitative characteristics that are necessary to provide useful financial information, (10 marks) b) Mr Bowen also read that a company's issued share capital may be increased by a bonus issue or by a rights issue Define 'bonus issue' and 'rights issue' and explain the fundamental difference between these two types of share issue (8 marks) c) Mr Bowen came across the term 'reserves' which is frequently found in company statements of financial position. He would like you to: i Explain the meaning of reserves' (4 marks) ii. Give two examples of reserves and explain how each of your examples comes into existence. (8 marks) Briefly explain how a company can utilize its share premium (5 marks) (Total: 35 marks)

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