Question

Which of the statements below is​ FALSE? A. Common​ stock's ownership claim on the assets and cash flow of a company is often referred to as a residual claim. B. The profits for common stock owners come before payment to​ employees, suppliers,​ government, and creditors. C. Stock is a major financing source for public companies. D. Shareholders elect the board of​ directors, which ultimately selects the management team that runs the dayminustominusday operations of the company.

Answer 1

The option B. The profits for common stock owners come before payment to​ employees, suppliers,​ government, and creditors. is the false statement.

Profit is any amount that is left after setting aside the cost and liabilities. It is financial gain which is represented by the difference between the amount that is spent and the amount that has been earned or gained. Whereas common stock is a kind of a common share holder equity which also considered to be a type of a security.