Common stock has voting rights; preferred stock usually does not have voting rights.TrueFalse

Answered: Common stock has voting rights;…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Common stock has voting rights; preferred stock usually does not have voting rights.
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False

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Step 1

Meaning of Common Stock :-

Common stock refers to share of ownership in a corporation. When people talk about stocks they are usually refer the common stock. Common shares represent a claim on profits and carry voting rights. Those who buy common shares will be essentially purchasing shares of ownership in a company. A holder of common stocks will receive voting rights, which increases proportionally with the more shares the holder owns.

Meaning of Preferred Stock:-

Although preferred shares still include some features of common shares, they also share some features with a debenture/bonds. Like bonds, preferred shares receive a fixed amount of income through a recurring dividend.

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