Final answer:
The incorrect statement about treasury shares is that they are considered as part of the earned or surplus profits thus distributable as dividends. Treasury shares, which a company repurchases, do not retain rights such as voting or receiving dividends, and they cannot be distributed as dividends. The correct option is D.
Step-by-step explanation:
The student has asked which statement is not correct regarding treasury shares. The incorrect statement is D. They are considered as part of the earned or surplus profits thus distributable as dividends. Treasury shares are the shares that a company has bought back from its shareholders.
These shares do not have voting rights, cannot receive dividends, and are not included in the distribution of dividends because they are not part of the earned or surplus profits. The other statements A, B, and C are all correct regarding treasury shares.
They indeed have no voting rights while they are held in treasury (A), they may be distributed as property dividends if there is a surplus profit, but this is true only after reissuing the shares to investors (B), and they are not entitled to dividends (C). The correct option is D.