Theory question 102
Company AccountsIn the context of company accounts, explain the following: (a) promoter; (b) prospectus; (c) underwriting; (d) bonus issue; (e) dividend.
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(a) Promoter: the person who takes the steps to form a company – prepares and files the documents for registration and obtains the certificate of incorporation.
(b) Prospectus: a document issued by a public company inviting the public to buy its shares or debentures, giving details of the company.
(c) Underwriting: an agreement in which an underwriter, for a commission, promises to buy any shares offered to the public that are not taken up.
(d) Bonus issue: free shares given to existing shareholders in proportion to their holdings, by capitalising reserves.
(e) Dividend: the part of a company's profit shared among shareholders, usually as a percentage of the nominal value of shares or an amount per share.
Keep each explanation to one or two sentences.