Which of the Following Statements Is Not True of Common

question 40

Multiple Choice

Which of the following statements is not true of common stock?

• A) It is ordinary stock that has no preferences.
• B) It entitles the holder to share in corporate profits in the form of dividends.
• C) It entitles the holder to participate in the distribution of capital upon dissolution.
• D) It is ordinarily nonvoting.

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Definitions:

Common Stock

A type of security that represents ownership in a corporation, granting holders voting rights and a share in the company’s profits via dividends.

Treasury Shares

Shares that were once part of the circulating supply of stock but were subsequently reacquired by the issuing company, reducing the amount of outstanding stock on the open market.

Financing Activities

Processes that involve the flow of cash between a company and its owners and creditors, affecting the equity and debt of the business.

Cash Flow

The total amount of money being transferred into and out of a business, primarily affecting the company's liquidity.