Question 17 of 17
Q.Differentiate between Shares and Debentures.
Yanam BieapBIEAP AP Intermediate (1st Year) Commerce Board 2024Subjective· 5mImportance★★★★★est
100% · 17/17 Questions
You're viewing a preview — the full solution, concept, methods & PYQ mapping are locked.
Start your 14-day free trial to unlock the full solution →Shares represent owned capital and their holders are owners who receive a fluctuating dividend and voting rights; debentures represent borrowed capital and their holders are creditors who receive a fixed rate of interest, carry no voting rights and are repaid on maturity. Dividend is payable only out of profit, whereas interest on debentures is a charge that must be paid even in a loss.
The main points of difference, as expected in the AP Intermediate 1st-year Commerce Paper-I, are:
| Basis | Shares | Debentures |
|---|---|---|
| Meaning | Part of the owned capital of the company | Part of the borrowed capital (a loan) |
| Status of holder | Owner / member of the company | Creditor of the company |
| Return | Dividend, which varies with profit | Interest at a fixed rate |
| Payment of return | Only out of profits | Must be paid even if there is no profit (a charge) |
| Voting rights | Shareholders have voting rights | Debenture-holders have no voting rights |
| Security | Not secured | May be secured by a charge on the company's assets |
| Repayment | Normally not repaid during the company's life | Repaid on maturity of the debenture |
Unlock everything free for 14 days
- Full step-by-step solutions
- Concept-first explanations
- Methods, shortcuts & mistakes
- PYQ mapping + timed mock tests
Full access for 14 days. No credit card required.