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What Is a Share?

Cumulative Pr...

Question

Cumulative Preference Share is one on which __________________.

A

Arrears of dividend accumulate

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B

Arrears of dividend do not accumulate

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C

Arrears of redeemable share capital accumulate

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D

None of these

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Solution

The correct option is A Arrears of dividend accumulate
Cumulative Preference Share:- A Cumulative Preference Share:- Apreference shareis said to becumulativewhen thearrears of dividendareaccumulateand sucharrearsare paid before paying anydividendto equity shareholders.

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Similar questions

Under which head and how are the following items shown in the Balance Sheet of a company under Schedule III:

(i) Calls-in-Arrears; (ii) Share Application Money Pending Allotment; (iii) Unpaid Dividend; and (iv) Dividend not paid on Cumulative Preference Shares?

Q. The authorised capital of M Ltd. consists of both cumulative preference shares and equity shares. Each

5

% cumulative preference share has a par value

R s . 100

. Each equity share has a par value

R s . 10

. During the year

2005 - 06

, the cumulative preference share capital was

R s . 2, 00, 000

If dividend declarations totalled

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2005 - 06

, the dividends allocated to the equity shareholders in the year

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will be ___________.

Q. The authorized capital of CAS Ltd. consists of both cumulative preference shares and equity shares. Each 5% cumulative preference share has a par value Rs 100. Each equity share has a par value Rs 10. During the year the cumulative preference share capital balance was Rs 4,00,000 and the equity share capital balance was Rs 10,00,000
If dividend declarations totalled Rs 16,000 and Rs 30,000 in the previous year and current year respectively, the dividends allocated to the equity share holders in the current year = ?

Differentiate between equity shares and preference shares on the basis of :

(a) Payment of dividend

(b) Refund of capital

(c) Rate of dividend

(d) Voting Rights

Q. Consider the following statements:
(1) Preference shares can be redeemed either out of profit of the company or out of the proceeds of fresh issue.
(2) Preference shares are redeemed after equity shares.
(3) Preference shareholders have preference right as to dividend as well as return of capital.
(4) A company cannot issue preference shares redeemable after 20 years.
The correct statements are ________________.

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