Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Accounting for Shares

Question:
The shares on which there is no any pre-fixed rate of dividend is decided, but the rate of dividend is fluctuating every year according to the availability of profits, such share are called :
Options:
Equity Share
Non-cumulative preference share
Non-convertible preference share
Debentures
Correct Answer:
Equity Share
Explanation:
Equity shares, also known as common shares, are shares of ownership in a company that do not have a fixed or pre-determined rate of dividend. Instead, the dividend paid to equity shareholders fluctuates from year to year based on the company's profitability and the decision of its management. Equity shareholders participate in the company's profits and losses, and their dividends are typically distributed after the company has met all its financial obligations, including preferred dividends (if any).