Hi! I need some help with this, It would be a great help if you elaborate on it. Thanks!

The exercises given below are based on an extract from the balance sheet and profit and loss account for the Skeldale Manufacturing Company as given in Figures 10.21 and 10.22. 10.1 What is understood by the terms 'balance sheet' and 'profit and loss account'? What is the difference between preference shareholders and ordinary shareholders? Why does a company retain profits and what effect does this have on the value of its share price? Who owns the assets of the company? Note that in the case of the Skeldale Manufacturing Company the dividends for the year were paid out of retained profits. Do you consider this to be a valid use of these profits? Liabilities Assets Capital Ordinary shares of 1 Retained profits 10% preference shares 100 000 20 000 40 000 Fixed assets Property Plant and equipment 80 000 90 000 Current liabilities Trade creditors Company tax Dividends 20 000 10 000 20 000 Current assets Stock and WIP Trade debtors 10 000 30 000 210 000 210 000 Figure 10.21 Balance sheet for the Skeldale Manufacturing Company