Which of the Following Statements Is NOT True

question 114

Multiple Choice

Which of the following statements is NOT true?

• A) The legal capital of a corporation represents an amount that cannot be returned to the owners while the corporation still exists.
• B) Investors in a corporation are called stockholders.
• C) The right to receive a dividend is one of the basic rights of preferred stockholders.
• D) Compared with preferred stock, common stock usually has a favorable preference in terms of dividends.

---

Definitions:

Useful Life

The estimated period over which an asset is expected to be used before it is considered no longer useful by the owner.

Loss

The result of a company's expenditures surpassing its revenues, leading to financial detriment.

Fair Market Value

The price at which an asset would change hands between a willing buyer and seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.

Commercial Substance

A transaction has commercial substance if it significantly changes the economic position or cash flows of the entity.