Terminology varies in the way companies differentiate among share types. But many corporations designate shares as common or preferred. What are the two special rights usually given to preferred shareholders?

Terminology varies in the way companies differentiate among share types. But many corporations designate shares as common or preferred. What are the two special rights usually given to preferred shareholders?

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter19: Deferred Compensation

Section: Chapter Questions

Problem 5RP

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Preferred stock: The stock that provides a fixed amount of return (dividend) to its stockholder before paying dividends to common stockholders is referred as preferred stock.

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Companies frequently issue both preference shares and ordinary shares. What are the major differences in the rights of shareholders between these two classes of shares?
Which of the following statements correctly relate to ordinary shares? i) They represent an ownership interest.ii) Ordinary equity holders are the first to have their claims met in the event of the company going into administration.iii) As dividends are the return to the shareholders, they are paid out of operating profits before tax.iv) Control rights often differ between ordinary and other classes of share.
What is the classification of shares that has privileges over any of the other classes of shares in the corporation? Par value shares No par value shares Common shares Preference shares
Which account cannot be used if a corporation has only one class of shares? a. Preference shares b. Ordinary shares c. Share Capital d. Accumulated profits
What advantages does a company achieve when it possesses significant influence over another company through voting stock ownership?
Which of the following correctly indicates how the issue price of common stock shares would be valued when a corporation makes a follow-on issue? Market forces determine the selling price, as it is marketed by the selling group The highest expected issue price per share that can be obtained while still selling of all of the shares is selected The highest expected issue price per share that can be obtained, regardless of the selling group's ability to market the shares, is selected The market price of existing shares is used as guidance
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Answer the following: Is it true or false that corporations muse issue common stock, but may or may not decide to issue preferred stock? Is it true or false that all forms and classes of stock carry voting rights? Is it true of false that stock sold for amounts in excess of par value results in a gain reported on the income statement?