Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Accounting for Shares

Question:

Which category of shares are carrying a fixed rate of dividend?

Options:

Equity shares

Preference shares

Either option 1 or 2

Both options 1 and 2

Correct Answer:

Preference shares

Explanation:

Preference shareholders carry a preferential right to dividend to be paid either as a fixed amount payable to preference shareholders or an amount calculated by a fixed rate of the nominal value of each share before any dividend is paid to the equity shareholders.