Which One of the Following Statements Is Correct Concerning the Differences

question 24

Multiple Choice

Which one of the following statements is correct concerning the differences between preferred and common stock?

• A) Common shareholders have first right of priority after creditors in liquidation.
• B) Preferred shares carry voting rights while common shares do not.
• C) Common shareholders generally have more control over a corporation than preferred shareholders.
• D) Common dividends in arrearage must be paid prior to any additional preferred stock dividends.
• E) Common stock is a form of equity while preferred stock is a form of debt from a legal standpoint.

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Definitions:

Internal Control

Protocols and processes designed by a business to secure the authenticity of its financial and accounting information, enhance accountability, and impede fraudulent operations.

Control Environment

The set of standards, processes, and structures that provide the foundation for carrying out internal control across the organization.

Proofs And Security Measures

Protocols and systems implemented to protect data, transactions, and assets against unauthorized access, theft, or modification.

Petty Cash Fund

A petty cash fund is a small amount of cash kept on hand for making immediate payments for miscellaneous small expenses.