Accountancy Part AAccounting for Shares

Match the following. LIST 1 LIST 2 (A) Cumulative Preference Share (I…

Match the following.

LIST 1	LIST 2
(A) Cumulative Preference Share	(I) Right to participate in remaining Profit
(B) Participating Preference Share	(II) Can be converted into Equity Share
(C) Convertible Preference Share	(III) Will be repaid after certain period
(D) Redeemable Preference Share	(IV) Right to claim arrear of dividend

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → (A)-(IV), (B)-(I), (C)-(II), (D)-(III)

Preference shares are classed by their rights on dividend, surplus, conversion and repayment.

(A) Cumulative Preference Share — this matches (IV) Right to claim arrear of dividend. Unpaid dividend accumulates and is paid in later years.
(B) Participating Preference Share — this matches (I) Right to participate in remaining Profit. The holders share in the surplus after the fixed dividend.
(C) Convertible Preference Share — this matches (II) Can be converted into Equity Share.
(D) Redeemable Preference Share — this matches (III) Will be repaid after certain period.

NCERT (2026-27 edition):
Preference Shares – “… However, notwithstanding the above two conditions, a holder of the preference share may have a right to participate fully or to a limited extent in the surpluses of the company as specified in the Memorandum or Articles of the company. Thus, the preference shares can be participating and non-participating. Similarly, these shares can be cumulative or non-cumulative, and redeemable or irredeemable.”