Two classifications appearing in the share capital section of the statement of financial position are
A)dividends payable and dividends distributable.
B)share capital and retained earnings.
C)preferred shares and common shares.
D)contributed capital and retained earnings.

Question

Quizplus · Accepted Answer

Preferred shares and common shares are both classifications of share capital. Preferred shares typically have priority over common shares in terms of receiving dividends and in the event of liquidation of the company, while common shares represent ownership in the company and typically do not have any special privileges. Dividends payable and dividends distributable are temporary accounts related to the payment of dividends and are not considered classifications of share capital. Retained earnings is a separate account that represents the accumulated profits of the company that have not been paid out as dividends, while contributed capital is a broader term that includes not only share capital but also other forms of contributed equity such as stock options or warrants.

Two Classifications Appearing in the Share Capital Section of the Statement