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Summary Financial accounting (recording statements)
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Unit 5: Financial Statements for CompaniesCharacteristics of companies
Companies are owned by shareholders who invests in the company by buying shar
intention of receiving a monetary benefit in the form of dividends or growth in the v
shares.
The shares that were sold to shareholders are called share capital. There can be a
made between two types of share capital, namely authorised and issued. Share
authorised if it is available for issue to shareholders. It is therefore possible to have
share capital that is not issued (or sold) to shareholders yet.
Issued share capital constitutes the shares that were actually issued to shareholder
are desirable and the company is doing well shares can also be issued at an add
that is called a share premium.
, Unit 5: Financial Statements for Companies
There are two main types of shares available to shareholders.
Preference shares are issued with a guaranteed dividend at a fixed ra
paid to shareholders each year.
Preference shareholders dividends will be paid before dividends are
ordinary shareholders.
The ordinary shareholders will receive dividends based on the c
financial performance and this could vary greatly from year to year.
In the event of liquidation, preference shareholders will received com
before ordinary shareholders.
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