(b) Explain, and justify, the different treatments of preference shares and equity and the related dividends in the financial statements. (6 marks) Answer should explain that: O preferences have the characteristics of a liability and are payable later than 12 months from the accounting date. They are a non-current liability. Equity shares represent the owner's interest in the entity and not a liability. Good answers would show that the equation A = L+E. Thus, preference Dividend are an expense shown as finance costs. Equity dividends are a distribution of profits to the owners and thus are not an expense - (b) Explain, and justify, the different treatments of preference shares and equity and the related dividends in the financial statements. (6 marks) Answer should explain that: O preferences have the characteristics of a liability and are payable later than 12 months from the accounting date. They are a non-current liability. Equity shares represent the owner's interest in the entity and not a liability. Good answers would show that the equation A = L+E. Thus, preference Dividend are an expense shown as finance costs. Equity dividends are a distribution of profits to the owners and thus are not an expense