The Fact That a Preference Share Is Redeemable

question 14

Multiple Choice

The fact that a preference share is redeemable:

• A) Makes it a financial liability.
• B) Makes it an equity instrument.
• C) Makes it a compound financial instrument.
• D) Does not automatically mean that it is a financial liability. The length of time until redemption is critical, because if it is greater than two years, it must be classified as an equity instrument.
• E) Does not automatically mean that it is a financial liability. Conditions and rights attaching to the share need to be considered before it can be classified as either a financial liability or equity instrument.

Recognize Freud's theory of personality development and its components.

Understand the mechanism and function of defense mechanisms in psychoanalytic theory.

Identify the limitations and criticisms of both cognitive and behavioral theories.

Distinguish between the principles of reinforcement schedules in behavior modification.

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Definitions:

Non-current Liability

A Non-current Liability is a financial obligation that a company does not expect to settle within the next twelve months from the reporting date.

Credit Balance

A situation where the total credits in an account exceed the total debits; it's common in liability, revenue, and equity accounts.

Risk Assessment

The process of identifying and evaluating potential risks that could negatively affect the achievement of objectives.

Internal Control

Procedures and policies implemented by a company to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.