GCEFinancial AccountingCompany Accounts2023

Which of the following best describes the term 'authorised share capital'?

AThe total amount of shares actually issued to shareholders
BThe maximum amount of share capital a company is permitted to raise as stated in its memorandum of associationCORRECT
CThe amount of capital paid up by shareholders on allotment
DThe nominal value of shares currently held by directors of the company
AI
Toaster Teacher
Why the answer is B, and why the others tempt you.
Authorised share capital, also called nominal or registered capital, is the maximum amount of share capital that a company is legally permitted to issue, as specified in its memorandum of association. It does not represent capital actually raised; that would be issued or paid-up capital. Options A, C, and D describe other forms of capital.
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