FIN/571 – Which one of the following statements about preferred stock is true

Subject: Business    / Finance
Question

Which one of the following statements about preferred stock is true?

Unlike dividends paid on common stock, dividends paid on preferred stock are a tax-deductible expense.

Dividends on preferred stock payable during the next twelve months are considered to be a corporate liability.

If preferred dividends are non-cumulative, then preferred dividends not paid in a particular year will be carried forward to the next year.

Preferred stock usually has a stated liquidating value of $100 per share.

There is no significant difference in the voting rights granted to preferred and common shareholders.

Which one of the following statements is false?

An aging schedule includes only overdue accounts.

Collection efforts may involve legal action.

Aging schedules are used to monitor accounts receivable.

Investments in accounts receivable equal average daily sales times average collection period.

If sales are seasonal, the percentages shown on an aging schedule will vary during the year.