If a Company Has Created a Forfeited Shares Reserve,this Means

question 14

Multiple Choice

If a company has created a forfeited shares reserve,this means that:

• A) The company is not a member of the Australian Stock Exchange and its constitution does not require it to refund amounts already paid by defaulting investors.
• B) The company is expecting that the amounts unpaid will be collected in the next period.
• C) The company is a member of the Australian Stock Exchange and is required to refund amounts already paid by defaulting investors.
• D) The company is holding the amounts already paid by defaulting investors in trust in order to repay them on the request of the investor.
• E) None of the given answers.

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Definitions:

Deadweight Loss

A cost to society created by market inefficiency, which occurs when supply and demand are out of equilibrium.

Ability-To-Pay Principle

A principle in taxation that holds that taxes should be levied according to an individual's or entity's capacity to pay.

Financial Burden

A financial burden is a substantial monetary load that may come in the form of debt, high costs, or other financial obligations that affect an individual's or entity's budget or financial well-being.

Average Tax Rate

The ratio of the total amount of taxes paid to the total income earned, representing the percentage of income paid in taxes.