When Accounting for the Issue of Shares Placing Application Monies

question 40

Multiple Choice

When accounting for the issue of shares placing application monies in a separate Cash Trust account is required:

• A)to meet the obligation by the company to remit the funds to ASIC.
• B)before the share issue is finalised the money does not belong to the company and some or all of it may need to be refunded
• C)because the bank requires it
• D)it is administratively easier for the company if the money is placed in a separate account

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Definitions:

Fixed Costs

Expenses that do not vary with the level of production or business activity, such as rent, salaries, and insurance premiums, remaining constant regardless of output.

Average Total Costs

The total costs of production divided by the quantity produced, representing the cost per unit of output.

Average Variable Costs

Represent the total variable costs (costs that change with production volume) divided by the number of units produced.

Average Variable Cost

The variable cost per unit of output, calculated by dividing total variable costs by the quantity of output produced.