Preferred Stockholders Have First Claim on the Assets of a Corporation

question 21

True/False

Preferred stockholders have first claim on the assets of a corporation if the corporation dissolves.

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Definitions:

Financing Activities

Transactions and events whereby resources are obtained from, or repaid to, owners (equity financing) and creditors (debt financing).

Equity Accounts

Accounts that represent the owner's claim or interest in the assets of a business, reflected in the equity section of the balance sheet.

Operating Activities

The day-to-day actions that are involved in running a business, which are reflected in the cash flows from operating activities section of the cash flow statement.

Direct Method

A method for creating a cash flow statement that itemizes the principal categories of gross cash inflows and outflows.