If a Business Has Both Ordinary Shares and Preference Shares,which

question 10

Multiple Choice

If a business has both Ordinary Shares and Preference Shares,which of the following statements are correct?
(i) Ordinary Shareholders have the right to vote at the AGM,but Preference Shareholders do not
(ii) Ordinary Shareholders will always get higher dividends
(iii) Preference Shareholders receive the same dividend year on year
(iv) Ordinary Shareholders are paid first upon liquidation of the company

• A) All of them are true
• B) (i), (ii) and (iii) are true
• C) (i) and (iii) are true
• D) (ii) and (iv) are true

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Definitions:

U.S. GAAP

United States Generally Accepted Accounting Principles, a collection of commonly-followed accounting rules and standards for financial reporting.

Investing Activities

Transactions involving the acquisition or disposal of non-current assets, such as property, plant, and equipment, included in a company’s cash flow statement.

Statement of Cash Flows

A financial document that provides detailed information about a company's cash inflows and outflows over a specific period.

Direct Method

A approach used in cash flow statement preparation that lists all major operating cash receipts and payments for the period, directly showing sources and uses of cash.