Tissues and Co Has Elected to Issue Preference Shares to the Value

question 13

Multiple Choice

Tissues and Co has elected to issue preference shares to the value of $220,000.Prior to the share issue the company has assets of $780,000,liabilities of $370,000 and equity recorded at $410,000.The terms of the share issue state that these shares are non-redeemable but a guaranteed cumulative dividend of 8 per cent of share value is payable.Calculate the debt-to-asset ratio immediately before and after the share issue:

• A) Before - 47.4 per cent; after - 47.4 per cent
• B) Before - 47.4 per cent; after - 37 per cent
• C) Before - 52.6 per cent; after - 63 per cent
• D) Before - 52.6 per cent; after - 59 per cent
• E) Before - 47.4 per cent; after - 59 per cent

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Definitions:

Precausal Thinking

A cognitive process observed in young children where reasoning is not based on logical causality, but on intuition or superficial associations.

Egocentrism

The cognitive inability to understand that other people's views and perspectives are different from one's own.

Perspective

A viewpoint or angle from which something is considered or evaluated.

Piaget's Theory

A theory of cognitive development that outlines how children's abilities to think and reason progress through four distinct stages as they grow.