Aiou Solved Assignments 2014 Code 444 Autumn

Advance Accounting Assignment 1 Code 444 Autumn 2016 Solved, this solved assignment 1 code 444 for the autumn semester 2016 explains different classes of shares along with other questions relating to general entries of debentures showing in the balance sheet too. Joint venture accounts examples, what is consignment and consignment accounting examples. All these has been explained in hard form of this assignment. These questions can also be in aiou solved assignment 1 code 444 spring 2017.

A class of shares is a type of listed company stock that is differentiated by the level of voting rights shareholders receive. For example, a listed company might have two share classes, or classes of stock, designated as Class A and Class B. Owners of companies that have been privately owned and go public often create class A and B share structures with different voting rights in order to maintain control and/or to make the company a more difficult target for a takeover.
The following are description of some typical classes of shares.
Ordinary share capital is the capital that is received or given by the owners of business in exchange for shares. The directors must decide whether to declare a dividend out of the companies’ attributable profits. Ordinary shares usually rank after preference shares for the purpose of dividends and returns of capital but carry voting rights not normally attributed to preference shareholders. Companies may also decide to divide their ordinary shares into “A:” and “B” ordinary shares with different rights attached to each. For example, class “A” could have all the voting rights and class “B” could have all the dividend rights.

Preference shares typically carry a preferential right to a fixed dividend and usually rank higher than other share of classes in the event of a winding up. The fixed rate of dividend is normally expressed as a percentage and the dividend is normally cumulative, unless stated otherwise. This means that should a company fail to pay a dividend it will accrue to the shareholder and become payable on the next payment date. The shares typically carry no voting rights nor do they carry further rights to participate in profits beyond the applicable dividend rate. These rights are generally set out in the company’s memorandum and articles of association.

Provided a limited company’s articles permit, a company may issue shares which can be redeemed by the company at their nominal value at some stated date in the future or at the director’s discretion, provided that there are sufficient attributable profits available, Section 210(4) of Companies Act 1990 provides that no shares shall be converted into redeemable shares, if, as a result of the conversion, the nominal value of the issued share capital, which is not redeemable, would be less than one tenth of the nominal value of the total issued share capital of the company.

Advance Accounting Assignment 1 Code 444 Autumn 2016

Redeemable shares offer a certain level of protection to the investor and allow control of the company to revert to those who controlled the company before the investor joined.


These are sometimes issued to the founders of a company and usually carry enhanced rights over other classes of share, such as increased voting rights or an entitlement to surplus profits over a specified period. However, in practice, the issue of such shares is extremely rare.

Deferred shares commonly carry few rights, as their rights are deferred to the ordinary shares they usually carry no right to vote or participate in a distribution.

Common reasons for creating different share classes include confining control of companies to certain individuals, offering shares with preferential dividend rights so as to encourage investment or to have different entitlements to the payment of surplus funds on the winding up of the company.

Advance Accounting Assignment 1 Code 444 Autumn 2016ASSIGNMENT 2 CODE 444


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AIOU Solved Assignment 1 Code 444 Spring 2017 B.COM

Q 1:  What is the difference between shares and debentures? Also, explain in detail the various types of shares and debentures, which may be issued by a Joint Stock Company.

Answer.    Definition:Justice Farewellas defined share in the following word,

“A share is the interest of the shareholder in the company; it is measured by the sum of money for the purpose of liability in the first place and of interest (dividend) in this condolencea company’s capital is divided into a number of equal parts called as a share”.

Nature of Share:

  1. The share of a company shall be movable property. It is transferable in the manner provided by the article of the company.
  2. The share capital no n refund able except in the case of winding up and reduction of capital.
  3. c. Each share in a company shall have distinctive numb

Class of Share:

Beforepassingofthecompanyordinance1948, accompany use to issue three types of shares.

  1. Ordinary Share.
  2. Preference Share.
  3. Deferred Share.

AIOU Solved Assignment 1 Code 444 Spring 2017 B A

The company’s ordinance no wallows the company to issue only one type of shares normally ordinary shares.

  • Ordinary Share: Are also called Equity Sh The holders of ordinary or Equity Shares are the real owners of the company .The ordinary shareholders have voting rights in the meetings of the company, they are entitled and receive dividend and are declared by the board of directors.The Equity Share capital cannot be redeemed during the life of the company.
  1. Preference Share: As the name suggest have certain preference on other types of shares. The preferences are as under.
  2. The first preference is for payment of dividend first paid to preference shareholder.
  3. In case of winding up the company, the preference shareholders have prior right in regard to repayment of capital.
  4. c. A fix rate of dividend is paid on preference share capital.
  5. Deferred Share: Is also called Founder’s Share we refuse to be issued to the promoters of the claims of all other shareholders had been not the deferred shareholders.

Definition:The Company’s Ordinance explains debentures in the following words; “Debentures includes Debenture Stock, bonds, terms, Finance Certificate(T.F.C)and any other security other then the share of a company with constituting a charge on the assets on the company or not.

A company may raise part of its capital by obtaining loans in the form of debentures. Debenture means too we a debt, “debenture is a security issues or allotted to the interest under the seal of the company who become creditors of the company”. A debenture may therefore be defined as a document issued by the company as an evidence of its debts .It contains a contract of the repayment of the principle sum of the interest at a specified date to the debenture holder.

Kinds of Debentures:

The debentures can be classified   of their issue by the company.

  1. Ordinary or Naked Debentures: The debentures, which are issued without any security for re payment, are known as Ordinary or Naked Debentures.
  2. Mortgage Debentures: Mortgage Debenture is one, which is secured by a mortgage

On the real property of thecompany.

  1. Redeemable Debentures: The debentures, which are re payable at the state time ,arecalled Redeemable Debentures.
  2. Irredeemable Debenture: A debenture, which is not payable during the life time of the issuing company, is called Irredeemable Debenture.
  3. Registered Debentures: A Registered Debenture id issued in the name of owner of

The debenture.

  1. Bearer Debentures: The Bearer Debentures, which does not show the name of owner the Bond.
  2. Equipment Trust Debenture: The debentures, which are issued of raise funds for

The purchase of new equipment of a business is called Equipment trust Debenture.

  1. Convertible Debentures: In certain cases, the company allows the debentures holders to count their debentures for the share of the company.


1.  Share Capital:     The company’s ordinance defines shares as   a share incapital of the company.A debenture is a certificate in datedness

Issued under the scale of the company.

2. Rights: The shareholder receives dividends when the   company earns theprofit.  They   suffer   financially when itsuffers losses.The right of debenture is to receive money at a fixed rate of interest. They can earn whit the profit or loss of company.
3. Voting: A shareholder is entitled to vote at the company’s general meeting.The debenture holder has no rights of voting at any meeting of the company.
4. Owner of the Company: The share holders except the Preference Shareholders are the owner of the company.The debentures are the creditors of the company and as   such they have no   claim on   the ownership of the company.
5. Return of the Capital: The shareholders are allowed to sale the share a will to other person but they are not paid back capital.The company gives an undertaking to pay back the capital along with the interest a stated time to the debenture.
6.  Management:     The shareholder manages the offers of the company through the created representatives called Board of Directors.The   debenture holders are   not entitled tointerfere in the management and the administration of the company as they are not the owner of the company.
7. Payment at the Winding up: In case the company is wind up the shareholder has a secondary claim of the return of money on the purchased shares.On winding up   of   the company, the   first propriety is to pay back the money to the debentureholder.
8. Islamic Sprits: The dividend paid to the shareholders depends upon the profit of the company. There are no fix errata of return on the shares of the company. Asmuch theyare Islamic in character.The company has to pay fix errata of interest to the bondholders whether the company makesany, which is basically against the Islam.

Redemption of Debentures means to discharge the liability on account of debenture. Debentures may be redeemed out of profit, out of capital or out of provision made for redemption. A company can redeemed its debenture by any of the following method.


Answer (a): Debenture-Definition:

Debenture is a type of debt instrument that is not secured by physical assets or collateral. Debentures are backed only by the general creditworthiness and reputation of the issuer. Both corporations and governments frequently issue this type of bond in order to secure capital. Like other types of bonds, debentures are documented in an indenture.

ABOUT AIOU Solved Assignment 1 Code 444 Spring 2017 FINE MORE


The holder of shares is known as shareholderthe holder of debentures is known as debenture holder
Debenture is the debt of the companyShare is the capital of the company
, debentures represent indebtedness of the companyThe shares represent ownership of the shareholders in the company
the income earned on debentures is interest.The income earned on shares is dividend
debentures are convertibleShares cannot be converted
Conversely, security charge is created for the payment of debentures.There is no security charge created for payment of shares
security charge is created for the payment of debenturesTrust deed is not executed in case of shares
Debentures can be issued at discount without any legal compliance.Shares are issued at discount subject to some legal compliance


Types of shares

A company may have many different of shares that come with different conditions and rights.

AIOU Solved Assignment 1 Code 444 Spring 2017 Types of Shares

There are four main types of shares

  • Ordinary shares are standard shares with no special rights or restrictions. They have the potential to give the highest financial gains, but also have the highest risk. Ordinary shareholders are the last to be paid if the company is wound up.
  • Preference shares typically carry a right that gives the holder preferential treatment when annual dividends are distributed to shareholders. Shares in this category receive a fixed dividend, which means that a shareholder would not benefit from an increase in the business’ profits. However, usually they have rights to their dividend ahead of ordinary shareholders if the business is in trouble. Also, where a business is wound up, they are likely to be repaid the par or nominal value of shares ahead of ordinary shareholders.
  • Cumulative preference shares give holders the right that, if a dividend cannot be paid one year, it will be carried forward to successive years. Dividends on cumulative preference shares must be paid, despite the earning levels of the business, provided the company has distributable profits.
  • Redeemable shares come with an agreement that the company can buy them back at a future date – this can be at a fixed date or at the choice of the business. A company cannot issue only redeemable shares.
  • Types Of Debentures
  • The major types of debentures are as follows:Types Of Debentures On The Basis Of Record Point Of Viewa. Registered Debentures
    These are the debentures that are registered with the company. The amount of such debentures is payable only to those debenture holders whose name appears in the register of the company.b. Bearer Debentures
    These are the debentures which are not recorded in a register of the company. Such debentures are transferable merely by delivery. Holder of bearer debentures is entitled to get the interest.

    2. Types Of Debentures On The Basis Of Security

    a. Secured Or Mortgage Debentures
    These are the debentures that are secured by a charge on the assets of the company. These are also called mortgage debentures. The holders of secured debentures have the right to recover their principal amount with the unpaid amount of interest on such debentures out of the assets mortgaged by the company.

    b. Unsecured Debentures
    Debentures which do not carry any security with regard to the principal amount or unpaid interest are unsecured debentures. These are also called simple debentures.


    AIOU Solved Assignment 1 Code 444 Spring 2017 Debentures Type

  • 3. Types Of Debentures On The Basis Of Redemption

    a. Redeemable Debentures
    These are the debentures which are issued for a fixed period. The principal amount of such debentures is paid off to the holders on the expiry of such period. These debentures can be redeemed by annual drawings or by purchasing from the open market.

    b. Non-redeemable Debentures
    These are the debentures which are not redeemed in the life time of the company. Such debentures are paid back only when the company goes to liquidation.


  • 4. Types Of Debentures On The Basis Of Convertibility

    a. Convertible Debentures
    These are the debentures that can be converted into shares of the company on the expiry of pre-decided period. The terms and conditions of conversion are generally announced at the time of issue of debentures.

    b. Non-convertible Debentures
    The holders of such debentures can not convert their debentures into the shares of the company.

    5. Types Of Debentures On The Basis Of Priority

    a. First Debentures
    These debentures are redeemed before other debentures.

    b. Second Debentures
    These debentures are redeemed after the redemption of first debentures.

AIOU Solved Assignment 1 Code 444 Spring 2017 continue

Q #2 Ayala Corporation opens a branch at Multan on IST January, 2016Book of ayala corporation Multan branch a/c for the year ended 31st 2016


Goods sent to Multan branch (invoice price) 30937Cash sales


Closing balance




Less: goods returnedStocks 57750
By the branch (invoice prince) 10500298875Petty cash 62558375
Cash sent to branch for exp41250Debtors27500


Stock reverse (57750 *1/5)Goods sent to branch
General profit and less account2975298875*1/559775

Branch debtors Account

Balance b/d             –cash105875
Sale (credit)134750Discount1375
Balance c/d27500


Q#3 tanvir and zaheer entered into a joint venture to construct a building for a contract price of rs. 4000000. They agreed to share profits………….


Joint venture account

Joint book accountRsRs

Miscellaneous exp



Zaheer (taken over of various items)16800
Wages25400Joint bank account4000000
Supervisors19800Contact price
Building pass fit8700
Tanvir 1398040

Zaheer 599160


AIOU Solved Assignment 1 Code 444 Spring 2017Join Bank Account

Joint bank account

Tanvir (contribution)

Zaheer (contribution)



Joint ventures

(payment of cost)

Joint venture131400Tanvir on (ventures completion)1498240
Joint venture

(recipt of contact

4000000Zaheer (on venture completion)702360
Building passed fit8700

Zaheer account


Joint venture


16800Cash (contribution)120000
Joint venture

(on venture completion)

702360Joint venture( profit )599160


Tanvir account

Supervisor (paid)19800Cash (contribution)120000
Joint venture

(on venture completion)

1498140Joint venture( profit )1398040



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