Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Accounting for Shares

Question:
Which of the following shareholders get their capital returned after some specified time?
Options:
Cumulative Preference Shares
Non-cumulative preference share
Non-convertible preference share
Redeemable Preference Shares
Correct Answer:
Redeemable Preference Shares
Explanation:
Redeemable preference shares are those when preferred shares of stocks are issued to shareholders, a call option may be embedded in them. These types of preferred stocks are called Redeemable Preference Shares because the company has the option to redeem them later. They do not have a maturity date and are retired by the company.