Grade 11 Exam > Grade 11 Questions > _____________ share capital has priority both...
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_____________ share capital has priority both in repayment of dividend as well as capital.
- a)Equity
- b)non preference
- c)Preference
- d)all of the above
Correct answer is option 'C'. Can you explain this answer?
Verified Answer
_____________ share capital has priority both in repayment of dividend...
Explanation:
The correct answer is C: Preference.
Preference share capital has priority both in repayment of dividend as well as capital. Here is a detailed explanation:
1. Equity:
- Equity refers to the ownership interest in a company.
- Shareholders who hold equity shares have a residual claim on the company's assets and earnings.
- They are entitled to receive dividends after preference shareholders have been paid.
2. Non-Preference:
- Non-preference shares, also known as ordinary shares, are the most common type of shares issued by companies.
- Non-preference shareholders do not have any priority in repayment of dividends or capital.
- They are entitled to receive dividends only after preference shareholders have been paid.
3. Preference:
- Preference shares are a type of share capital that carries certain preferential rights over ordinary shares.
- Preference shareholders have priority in the payment of dividends.
- They are entitled to receive a fixed rate of dividend before any dividend is paid to ordinary shareholders.
- In case of liquidation, preference shareholders have priority in the repayment of capital over ordinary shareholders.
4. All of the above:
- This option is incorrect because not all types of share capital have priority in repayment of dividend as well as capital.
- Only preference share capital has this priority.
In conclusion, preference share capital has priority both in repayment of dividend as well as capital.
View all questions of this test
The correct answer is C: Preference.
Preference share capital has priority both in repayment of dividend as well as capital. Here is a detailed explanation:
1. Equity:
- Equity refers to the ownership interest in a company.
- Shareholders who hold equity shares have a residual claim on the company's assets and earnings.
- They are entitled to receive dividends after preference shareholders have been paid.
2. Non-Preference:
- Non-preference shares, also known as ordinary shares, are the most common type of shares issued by companies.
- Non-preference shareholders do not have any priority in repayment of dividends or capital.
- They are entitled to receive dividends only after preference shareholders have been paid.
3. Preference:
- Preference shares are a type of share capital that carries certain preferential rights over ordinary shares.
- Preference shareholders have priority in the payment of dividends.
- They are entitled to receive a fixed rate of dividend before any dividend is paid to ordinary shareholders.
- In case of liquidation, preference shareholders have priority in the repayment of capital over ordinary shareholders.
4. All of the above:
- This option is incorrect because not all types of share capital have priority in repayment of dividend as well as capital.
- Only preference share capital has this priority.
In conclusion, preference share capital has priority both in repayment of dividend as well as capital.
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_____________ share capital has priority both in repayment of dividend as well as capital.a)Equityb)non preferencec)Preferenced)all of the aboveCorrect answer is option 'C'. Can you explain this answer?
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