Which of the Following Is Not True

question 63

Multiple Choice

Which of the following is not true?

• A)Convertible preferred shares give the holder of preferred shares the right to convert the preferred shares into a specified number of common shares under certain specified conditions.
• B)Convertible preferred shares require the holder of preferred shares to convert the preferred shares into a specified number of common shares under certain specified conditions.
• C)Convertible preferred shares provide the security holders with the possibility of capital appreciation by converting the preferred shares into common shares if the market price of the common shares rises sufficiently.
• D)Convertible preferred shares provide the security holders with a relatively assured dividend.
• E)Convertible preferred shares provide the security holders with a claim that is senior to that of common shareholders.

---

Definitions:

Variable Factory Overhead

Costs that vary with the volume of production and include expenses such as indirect materials and utilities.

Absorption Costing

An accounting method that includes all direct costs and overhead expenses related to the production of a product in its cost base.

Variable Costing Income Statement

A financial statement format that only includes variable costs as product costs, with fixed manufacturing overhead treated as a period expense.

Variable Cost of Goods Sold

Costs that vary directly with the level of production, including raw materials and direct labor expenses.