ISSUES OF SHARES.

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…