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प्रश्न
What are preference shares?
उत्तर
As the name indicates, these shares have certain preferential rights distinct from those attached to equity shares. The shares that carry the following preferential rights are termed preference shares:
- A preferential right as to payment of dividends during the life time of the company.
- A preferential right as to the return of capital in the event of the winding up of the company.
The holder of a preference share has a prior right to receive a fixed rate of dividend before any dividend is paid to equity shares. The rate of dividend is prescribed at the time of issue.
Normally, preference shares do not carry any voting power. They have voting rights only on matters which affect their interest, such as selling of undertakings or changing rights of preference shares, etc., or they get voting rights if a dividend remains unpaid.
The preference shareholders are co-owners of the company but not controllers. These shares are purchased by cautious investors who are interested in the safety of investment and who want steady returns on investments.
संबंधित प्रश्न
Preference shares carry dividend at .......................... rate.
- Fixed
- Fluctuating
- Lower
Equity Shares and Preference Shares.
Pass necessary journal entries in the following cases
Kay Ltd. converted 3,000, 12% debentures of Rs 100 each issued at a premium of 10% into equity shares of Rs 100 each issued at a premium of 25%.
Jain Motors Ltd. converted its 200, 8% debentures of Rs 100 each issued at a discount of 6% into equity shares of Rs 10 each, issued at a premium of 25%. Discount on issue of 8% debentures has not yet been written off.
Showing your working notes clearly pass necessary Journal Entries on conversion of 8% debentures into equity shares.
Jain Ltd. purchased Building for Rs 10,00,000 from Gupta Ltd. 10% of the payable amount was paid by a cheque drawn in favour of Gupta Ltd. The balance was paid by issue of Equity Shares of Rs 10 each at a discount of 10%.
Pass necessary Journal Entries in the books of Jain Ltd.
The shares which are issued to existing equty shareholders as a gift
The bonds on which rate of interest remains constant throughout the life of the bond.
Draft a letter of allotment of shares to the applicant.
Write notes on Features of equity shares.
Write a letter to the debenture holder informing him/her about the conversion of debentures into equity shares.
Select the proper option from the option given below and rewrite the sentences:
If a share of 100 is issued at 110. It is said to be issued at ___________.
Long Answer Question
What is a ‘Preference Share’? Describe the different types of preference shares.
Discuss the process for the allotment of shares of a company in case of over subscription.
Bharat Ltd made the first call of ₹ 2 per share on its 1,00,000 Equity Shares on 1st March , 2006. Ashok, a shareholder, holding 800 shares paid the second and final call amount along with the first call money. The second and final call amount was ₹ 3 per share. Pass necessary journal entries for recording the above using the Calls-in Advance Account.
Rajan Ltd . purchased assets from Geeta & Co . for ₹ 5,00,000. A sum of ₹ 1,00,000 was paid by means of a bank draft and for the balance due Rajan Ltd. issued equity Shares of ₹ 10 each at a premium of 25%. journalise the above transactions in the books of the company.
Sandesh Ltd. took over the assets of ₹ 7,00,000 and liabilities of ₹ 2,00,000 from Sanchar Ltd. for a purchase consideration of ₹ 4,59,500. ₹ 8,500 were paid by accepting a draft in favour of Sanchar Ltd. payable after three months and the balance was paid by issue of equity shares of ₹ 10 each at a premium of 10% in favour of Sanchar Ltd.
Pass necessary journal entries for the above transactions in the books of Sandesh Ltd.
Explain the features of preference shares.
Explain any three disadvantages of issuing equity shares, from the Company's point of view.
Distinguish between equity shares and preference shares.
According to Companies Act company cannot issue its share at ________.
The director of a company must be ______.
When Equity Shares dominate the capital structure, the capital is considered as high geared.
