FINANCIAL ACCOUNTING SSS3 FIRST TERM        

WEEK 9 &10

ISSUES OF SHARES

Performance Objectives

Students should be able to:

1.       Define the term shares.

2.       Explain the following: Cumulative and non-cumulative preference share.

Contents

Definition of shares

Shares can be defined as units of the capital of ownership of a limited company. It is an ownership right in a company. A company cannot commence business until it raises capital by selling shares to the public for subscription.

CLASSES OF SHARES

There are three classes of shares in a limited liability company, they are:

• Ordinary shares
• Preference shares
• Founder’s shares

• ORDINARY SHARES: The shareholders of these are entitled to dividends after preference shareholders have settled. They are the owners of the company because they bear company risk and their dividend is not fixed. No wonder during the period of prosperity, they receive more dividends. They are often known as equities.
• PREFERENCE SHARES: The shareholders of these shares are entitled to.... View More