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CUET Accountancy 2025 PYQs13 May Shift 1. Free, no login required.

Company Accounts

past year questions, CUET Accountancy 2025 13 May Shift 1

Share Capital

past year questions, Company Accounts, CUET Accountancy 2025 13 May Shift 1

Easy

Which section of the Company's Act defines/describes Equity and Preference Shares?

Solution

✅ Correct Option: 4

Solution

Section 43 of the Companies Act, 2013 defines and describes Equity Shares and Preference Shares.

Understanding Section 43

This section is titled "Kinds of Share Capital" and categorizes the share capital that a company can issue into two types:

1. Equity Share Capital

Share capital that is not preference share capital. It represents ownership in the company with voting rights and residual claim on profits.

2. Preference Share Capital

Share capital with preferential rights regarding:

  • Dividend: Fixed rate of dividend paid before equity shareholders
  • Repayment of capital: Priority in repayment during winding up of the company

Why Other Options are Incorrect

  • Section 40: Deals with the payment of dividends
  • Section 41: Relates to the power of a company to alter share capital
  • Section 42: Deals with the issue and allotment of securities on private placement

Correct Answer: Option 4 (Section 43)

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