Preference Shareholders vs Common Stockholders

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What is the essential feature of expenses as defined in the text?

Increases in economic benefits during the accounting period

Decreases in equity other than those relating to distribution to equity participants

Increases in equity other than those relating to contributions from equity participants

Decreases in economic benefits during the accounting period (correct)

What is the purpose of presenting income and expenses in different ways in the statement of comprehensive income?

To provide information relevant to economic decision-making (correct)

To satisfy the criteria for recognition in the income statement

To distinguish between ordinary and non-ordinary items

To measure performance or determine return on investment (ROI) or earnings per share (EPS)

What are the two methods of presenting the statement of comprehensive income mentioned in the text?

Ordinary and non-ordinary method

Nature of expense method and function of expense method (correct)

Direct and indirect method

Nature of expense method and nature of income method

What is the essential feature of income as defined in the text?

Increases in economic benefits during the accounting period in the form of inflows or enhancement of assets Signup and view all the answers

What is the purpose of profit?

To measure performance or the basis of other measures such as return on investment (ROI) or earnings per share (EPS) Signup and view all the answers

What is the main purpose of the definitions of income and expenses provided in the text?

To identify their essential features but not attempt to satisfy the criteria for recognition Signup and view all the answers

What does the share premium represent?

The excess amount contributed by the shareholders over the par value Signup and view all the answers

Under what circumstances might an entity create reserves?

To protect against losses, voluntary management actions, or contractual obligations Signup and view all the answers

When will a revaluation adjustment occur?

Only when an entity adopts the revaluation model for property, plant, and equipment after initial recognition Signup and view all the answers

What does the foreign currency translation reserve arise from?

Translation gain or loss from foreign currency transactions Signup and view all the answers

What is the purpose of a statement of cash flows?

To present cash inflows and outflows from operating, investing, and financing activities Signup and view all the answers

What does the term 'excess' refer to in the context of providing funds to ordinary shareholders?

Any remaining funds after settling claims of preference shareholders Signup and view all the answers

What is the primary purpose of financial statements?

To assist in making financial decisions based on the company's financial position, performance, and cash flow Signup and view all the answers

Which of the following is an example of how financial statements are used?

Both a business owner and a bank manager use financial statements as described in options A and B Signup and view all the answers

What is the relationship between preference shareholders and ordinary shareholders in terms of settling claims?

Preference shareholders' claims are settled first, and any excess goes to ordinary shareholders Signup and view all the answers

What is the significance of the 'preference on the net asset' for preference shareholders?

It means that preference shareholders' equity claims will be settled before ordinary shareholders' claims Signup and view all the answers

What do financial statements reflect?

All of the above Signup and view all the answers

Preference Shareholders vs Common Stockholders

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