Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Accounting for Shares

Question:

There are two statements marked as Assertion (A) and Reason (R). Mark your answer as per the codes provided below-
Assertion:
Equity shares does not carry fixed rate of dividend and they are the ultimate risk bearer.
Reasoning: Equity shareholders are getting dividend from residue part of profits and in the case of windup of the company, invested money will be refunded at the last.

Options:

Both Assertion (A) and reasoning (R) are correct and R is the correct explanation of A.

Both Assertion (A) and reasoning (R) are correct and but R is not the correct explanation of A.

Assertion (A) is true but Reasoning (R) is not correct.

Assertion (A) is not true but Reasoning (R) is correct.

Correct Answer:

Both Assertion (A) and reasoning (R) are correct and R is the correct explanation of A.

Explanation:

Both Assertion (A) and reasoning (R) are correct and R is the correct explanation of A. Equity shares does not carry fixed rate of dividend and they are the ultimate risk bearer. Equity shareholders are getting dividend from residue part of profits and in the case of windup of the company, invested money will be refunded at the last.