A Security That Represents Direct Ownership Interest in a Corporation

question 58

Multiple Choice

A security that represents direct ownership interest in a corporation and allows the owner to share in the profits is known as which of the following?

• A) a mortgage bond
• B) common shares
• C) preferred shares
• D) a convertible bond

Understand the components and importance of financial planning.

Recognize the steps in the financial planning process and their significance.

Identify and assess various types of financial risks and how they impact financial decisions.

Understand the role of savings and investment in achieving financial goals.

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Definitions:

Uncollectible Accounts Expense

An expense account reflecting the cost of accounts receivable that a company does not expect to collect.

Allowance for Doubtful Accounts

A contra asset account that reduces the total amount of accounts receivable on the balance sheet to reflect the likelihood of some accounts being uncollectible.

Net Credit Sales

The total value of sales made on credit after subtracting any returns and allowances, reflecting the actual sales revenue expected to be collected.

Allowance for Doubtful Accounts

A contra-asset account that represents the amount of receivables a company does not expect to actually collect.