Commerce WASSCE (SC), 2021

Question 2

 

    Differentiate between the following terms:

    1. Interest an profit;
    2. Share and debenture;
    3. Ordinary share and preference share;
    4. Cumulative preference share and participating preference share;
    5. Cum div and ex div.

Observation

Comments

Some candidates who attempted this question did well while some did not use conjunction.  Others could not differentiate on the same base.

The expected responses are.

  1. Interest and profit
  2. Interest is the reward earned from the use of capital while profit is the reward for entrepreneurship.                                                                                                                            113

  3. Share and debenture
  4. A share shows part ownership of a company while a debenture is debt owed by a company.
    OR
    Shares earn dividend while debentures earn fixed interest.

  5. Ordinary shares and preference shares
  6. Ordinary shares are shares whose holders are paid after all other shareholders have received their dividend while preference shares are shares whose owners receive dividend first.
    OR
    Holders of ordinary shares have voting right whilst those of preference shares have no voting rights.

  7. Cumulative preference shares and participating preference shares
  8. Cumulative preference shares are shares whose owners are entitled to payment of unpaid dividend during future years when profit is made while participating preference shares are shares whose holders are entitled to extra dividend if a certain level of profit is attained.

  9. Cum div and ex div

            If a person buys shares cum div, it means that the dividend that is about to be paid will be his ;     on the other hand , if a person buys shares ex-div , it means that the dividend that is to be paid           will not be paid to him but to the previous owner.