JAMB Accounting 2025 Objective — Question 12

Question 12 of 41 from the Joint Admissions and Matriculation Board (JAMB) Accounting 2025 Objective paper, with the correct answer and a full explanation.

In the situation of bankruptcy, a stock which is recorded above common stock and below debt is

A. Preferred StockCorrect
B. Debt Liabilities
C. Common Liabilities
D. Hybrid Stock

Explanation

Preferred stock has a higher claim on earnings and assets than common stock, so it comes above common stock. Debt has a higher obligation than preferred stock, so it comes below debt.

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