Since Common Stockholders Are the True Owners, Preferred Stockholders' Dividends

question 116

Multiple Choice

Since common stockholders are the true owners, preferred stockholders' dividends are deducted from net income before computing _____.

• A) the debt ratio
• B) the current ratio
• C) return-on-equity
• D) earnings per share

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Definitions:

Bonds

Long-term debt securities issued by corporations or governments to finance operations, projects, or other capital needs, paying periodic interest and the principal amount at maturity.

Stock

Stock represents ownership shares in a corporation, giving holders a claim on part of the company's assets and earnings.

Bond Payable

A recorded obligation indicating a company must repay a borrowed sum at a set interest rate by a specified date.

Accounts Payable

Liabilities or amounts owed by a business to its creditors for goods and services that have been received but not yet paid for.