Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Accounting for Shares

Question:
What is the primary function of a share in a company?
Options:
To represent ownership interest
To signify company liabilities
To indicate the company's expenses
To serve as a form of company debt
Correct Answer:
To represent ownership interest
Explanation:
The primary function of a share in a company is to represent ownership interest in that company. When individuals or entities purchase shares of a company, they become shareholders and thus owners of a portion of the company. Each share that is issued by the company represents a fractional ownership stake in the overall company.