Which of the Following Statements Is FALSE

question 45

Multiple Choice

Which of the following statements is FALSE?

• A)The preferred stock issued by young companies typically does not pay regular cash dividends.
• B)The preferred stock issued by young companies usually gives the owner an option to convert it into common stock on some future date,so it is often called callable preferred stock.
• C)If the company runs into financial difficulties,the preferred stockholders have a senior claim on the assets of the firm relative to any common stockholders.
• D)Preferred stock issued by mature companies such as banks usually has a preferential dividend and seniority in any liquidation and sometimes special voting rights.

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Definitions:

FASB

Financial Accounting Standards Board; an independent organization responsible for establishing accounting and financial reporting standards in the United States.

Future Cash Flows

Future cash flows refer to the projected inflows and outflows of cash that a company expects from its operations over a future period.

Credit Standing

The assessment of a borrower's financial health and ability to repay debt, typically influenced by credit history and financial behavior.

Materiality

An accounting and auditing principle referring to the significance of transactions or information that could influence the decision-making of users of financial statements.