ACCA Applied Knowledge · Financial Accounting · Statement of cash flows (excluding partnerships)
Orion Co's share capital and share premium were: opening share capital $500,000 (50c shares) and share premium $120,000; closing share capital $600,000 and share premium $180,000. The increase arose from a cash issue only, with no bonus issue. What is the cash inflow from the share issue?
The cash inflow is $160,000, being the $100,000 increase in share capital plus the $60,000 increase in share premium. Both amounts were received in cash since there was no bonus issue, so the premium must be included in the financing inflow.
- A$100,000
- B$160,000Correct
- C$60,000
- D$280,000
Explanation
Share capital rose by $100,000 and share premium by $60,000. Total cash raised is $100,000 + $60,000 = $160,000. Using only share capital ignores the premium.
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