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What is Meant by a 'Share' ? Give Any Two Differences Between 'Preference Shares' and 'Equity Shares'. - Accountancy

What is meant by a 'Share' ? Give any two differences between 'Preference Shares' and 'Equity Shares'.

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Solution

Share refers to a unit into which the share capital of a company is divided. It includes the stock of the company and represents ownership claims on business. 

Basis of Difference Preference Shares Equity Shares
Participation in Management Preference shareholders have right to participate in the management only in special circumstances. Equity shareholders have right to participate in management.
Sequence of Dividend Fixed rate of dividend is received Dividend to equity shareholders is paid only if there is surplus after paying off preference shareholders

 

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