The Redemption of Redeemable Preference Shares Out of Retained Profits

question 1

Multiple Choice

The redemption of redeemable preference shares out of retained profits:

• A)involves cash outflow for an investing activity
• B)does not involve a cash flow, so does not affect the amounts in the cash flow statement
• C)involves cash inflow for an investing activity
• D)involves cash inflow for an a financing activity

---

Definitions:

Allowance Account

An account used in accounting to reduce the value of accounts receivable to a more realistic amount by accounting for potential bad debts.

Uncollectibles

Debts owed to a company that are considered unlikely to be recovered or paid.

Aging of Receivables

The process of categorizing accounts receivable by their due dates to estimate bad debt expenses.