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JAMB Principles of Accounts 2001 Question 40

Question 40

Company Accounts

The main difference between the ordinary and preference shareholders is that

  1. A.the former receive dividends while the latter do not
  2. B.the latter are not members of the company while the former are
  3. C.in the case of winding up, the former are paid first before the latter
  4. D.the former have voting rights while the latter do not.
Show the answer and explanation

Answer: D (the former have voting rights while the latter do not.)

Explanation

Ordinary shareholders vote at meetings; preference shareholders usually do not.