Q.Explain the classes of shares.

Equity (ordinary) shares are those which are not preference shares. Their dividend is not fixed, they carry voting rights, their holders are the true owners who bear the business risk, and they rank after preference shares for both dividend and repayment of capital.

This is a standard AP Inter 2nd-year (Commerce) company-accounts question, aligned with the NCERT/CBSE commerce curriculum.

Main features of equity shares:

• No fixed dividend — dividend varies with profits and is decided each year; it may be high in good years and nil in bad years.
• Voting rights — equity shareholders have the right to vote and so control the management of the company.
• Real owners / risk bearers — they are the ultimate owners and bear the greatest risk of the business. …

Authorised capital, also called registered or nominal capital, is the maximum amount of capital a company is permitted to raise by issuing shares, as fixed by the capital clause of its Memorandum of Association. The company cannot issue shares beyond this amount without altering the memorandum.

Authorised Capital is the maximum amount of share capital that a company is authorised to issue to the public during its lifetime. It is stated in the capital clause of the Memorandum of Association at the time of incorporation and is therefore also known as registered capital or nominal capital. The company may issue shares up to this limit but not beyond it; to raise more, it must first alter the capital clause by following the legal procedure. Au …

An equity share (ordinary share) is a share that is not a preference share. Equity shareholders are the real owners of the company: they have no fixed dividend, are paid dividend and capital only after preference shareholders, bear the greatest risk, and enjoy voting rights and control.

This concept is from the company-accounts chapter of the AP Inter 2nd-year (Class 12) Accountancy syllabus, which aligns with the NCERT/CBSE commerce curriculum.

Share capital of a company is divided into two classes: preference shares and equity shares. An equity share is any share that is not a preference share. Equity shareholders do not get a fixed rate of dividend; they receive dividend out of the remaining profits only after the preference dividend has been paid, and the rate can vary from year to year. At the time of winding up, their capital is repaid last, after all outside liabilities and preference capital. In return for beari …

An equity share is a share carrying no fixed/preferential dividend or repayment right; equity shareholders are the real owners, have voting rights, and get the residual profit after preference dividend.

An equity share (ordinary share) is a share which is not a preference share. It does not carry any fixed rate of dividend and has no preferential right either to dividend or to repayment of capital on winding up.

Key features:

• Equity shareholders are the real owners of the company and bear the ultimate risk.
• They enjoy voting rights and control the company's management.
• Dividend is paid to them only after the preference dividend, out of the residual (remaining) profits, and its rate is not fixed. …