Scenario
A company has a called up share capital of £1 and has made a loss in the first year of trading of £1,001.
Share Capital ( 1)
Reserves 1,001
Equity 1,000
What implications would this have?
Replies (4)
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Erm...
That the company is loss making and therefore no dividends are payable.
Not really sure of the point of the question...
If it is a loss making business, it is a loss making business.
In the short term, businesses do not go out of business due to making financial losses - they go out of business because they run out of cash.
There may be going concern issues though...