Which of the following is a quantified form of share capital?

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Multiple Choice

Which of the following is a quantified form of share capital?

The key idea is that one form of share capital is a defined ceiling: the maximum amount of share capital a company is permitted to issue, as stated in its constitution. This is the authorised share capital. It is quantified because it specifies a concrete monetary limit (for example, up to £1 million). It differs from issued share capital, which is the actual amount that has been issued to shareholders, and from paid-up capital, which is the amount actually paid on those shares. Dividends on shares are distributions of profits, not capital. Share premium is the extra amount received over the nominal value when shares are issued and is treated as a separate capital reserve, not the share capital itself. Retained earnings are profits kept in the business, forming part of reserves rather than share capital. So the authorised share capital is the quantified form of share capital.

The key idea is that one form of share capital is a defined ceiling: the maximum amount of share capital a company is permitted to issue, as stated in its constitution. This is the authorised share capital. It is quantified because it specifies a concrete monetary limit (for example, up to £1 million). It differs from issued share capital, which is the actual amount that has been issued to shareholders, and from paid-up capital, which is the amount actually paid on those shares.

Dividends on shares are distributions of profits, not capital. Share premium is the extra amount received over the nominal value when shares are issued and is treated as a separate capital reserve, not the share capital itself. Retained earnings are profits kept in the business, forming part of reserves rather than share capital. So the authorised share capital is the quantified form of share capital.

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