Financial Reporting And Analysis - Financial Reporting And Analysis Section 1
71. Which of the following statements is least accurate?
- Option : A
- Explanation : Treasury shares are non-voting and a do not receive dividends declared by the company. B and C are true statements.
- Option : A
- Explanation : Non-controlling interests are equity interests of minority shareholders in the subsidiary companies that have been consolidated by the parent company, but that are not wholly owned by the parent company.
- Option : C
- Explanation : Common stockholders get dividends once preferred stockholders have been paid. They enjoy voting rights. Preferred stockholders do not have voting rights, but do get dividends. Treasury stockholders do not have voting rights and do not get dividends.
74. Preferred shares are classified as:
- Option : C
- Explanation : Preferred shares are classified as equity or financial liabilities depending on their characteristics. For example, perpetual preferred shares are classified as equity while preferred shares with mandatory redemption are classified as financial liabilities.
- Option : B
- Explanation : A common-size balance sheet expresses all balance sheet accounts as a percentage of total assets and provides insight into what portion of a company’s assets is liquid. In contrast, cash and current ratios measure liquidity relative to current liabilities, not relative to total assets.
