The Classification of a Preference Share as an Equity Instrument

question 83

Multiple Choice

The classification of a preference share as an equity instrument or financial liability is:

• A) affected by a history of making distributions.
• B) affected by an intention to make distributions in the future.
• C) not affected by a history of making distributions.
• D) not affected by the other rights that attach to them if they are non-redeemable.

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Definitions:

Economic Activity

Actions that involve the production, distribution, and consumption of goods and services within an economy.

Market Economy

An economic system where supply and demand from consumers and businesses drive the production and allocation of resources and services, with minimal government intervention.

Market Failure

A circumstance where goods and services are distributed ineffectively by a market operating without restrictions, commonly leading to a decline in social welfare.

Allocate Resources

The process of distributing available resources among various competing needs and wants in order to achieve desired outcomes efficiently and effectively.