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Questions and Answers
Ji share capital ji?
Share capital ni ji tuu lafara lafara ka jaa soya ka jaa.
Ji issued share capital ji?
Issued share capital ni ji tuu lafara lafara ka jaa soya ka jaa a duka ka jaa.
Ji paid-up capital ji?
Paid-up capital ni ji tuu lafara lafara ka jaa soya ka jaa a yi kyun ka jaa a duka ka jaa.
Kunu stock capital ana yi duka?
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Kunu stock capital da sharers da kuwa?
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Ji authorized share capital ji?
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Nyini nganu ya share capital?
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Hisa za kawaida zinatoa nini kwa wanahisa?
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Ni nani anapewa kipaumbele katika malipo ya gawio kati ya wamiliki wa hisa za kawaida na wale wa hisa za kihisani?
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Ni aina gani za hisa za kihisani zilizotajwa kwenye makala?
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Study Notes
Understanding Corporate Accounting Share Capital: Types of Shares
Share capital, often referred to as equity capital, is the lifeblood of a company, representing funds acquired through selling shares of common or preferred stock. This article explores the fundamental types of share capital, shedding light on the differences between these two forms of stock and their implications.
Common Stock
- Common stock provides shareholders with voting rights and a claim to a portion of the company's profits, usually in the form of dividends.
- Common stockholders are not entitled to fixed dividends or debt repayment.
- In the event of liquidation, common stockholders are paid after creditors and preferred stockholders.
Preferred Stock
- Preferred stock does not carry voting rights, but it does offer a fixed dividend and a preference in debt repayment.
- Preferred stockholders are paid dividends before common stockholders and before debt repayment begins.
- Preferred stockholders are not entitled to an equity claim in the company's profits beyond fixed dividends.
The types of preferred stock include callable stock, convertible stock, cumulative stock, non-cumulative stock, and participating stock.
Authorized Share Capital
Before a company can sell equity, it must specify the maximum amount of share capital it is authorized to raise, outlined in its founding documents. A company's authorized share capital can change over time, with authorization to issue and sell additional shares being obtained as needed.
Issued Share Capital
The value of shares a company elects to sell makes up its issued share capital. Issued share capital is the monetary value of the portion of shares of stock a company offers for sale to investors, and it does not include shares sold in a secondary market.
Paid-Up Capital
Paid-up capital represents the total amount of money a company has been paid from shareholders in exchange for shares of its stock. It does not exceed the authorized share capital and includes the sum of the par value, additional premium paid, and any contributed surplus.
In summary, share capital is the lifeblood of a company, and the different types of stock issued provide distinct benefits and features to shareholders. Common stock provides voting rights and a claim to a portion of the company's profits, while preferred stock offers fixed dividends and a preference in debt repayment. The amount of share capital a company can legally raise is specified by the authorized share capital, and issued share capital is the portion of the company's authorized share capital that has been sold. Paid-up capital is the total amount of money that shareholders have paid for shares.
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Description
Explore the fundamental types of share capital in corporate accounting, including common stock and preferred stock. Learn about authorized share capital, issued share capital, and paid-up capital, and understand the implications of each on shareholders and the company.
