Participating preference shareholders are entitled to share in the earnings of the entity. They participate in earnings distributions under set terms and conditions. Hence, after the stated preference dividend is paid, and ordinary shareholders receive an equal dividend, any remaining dividends are allocated to all shareholders in proportion to the par values of their shares.

In a recruiting interview, one may not ask about the applicant's marital status, number of children, height and weight, criminal record except for the purpose of giving a security clearance), kind of military discharge, or age.

When the effective interest rate method is used, interest expense equals the effective rate a constant rate) times the carrying amount at the beginning of the period. The carrying amount is the par value plus the balance of the unamortized premium. The difference between interest expense and the nominal interest is the premium amortization for the period. Thus, interest expense is a decreasing amount each period because a constant rate is applied to a decreasing carrying amount.

Regression analysis develops an equation to explain the behavior of a dependent variable for example, investment income) in terms of one or more independent variables for example, market risk and the risks of particular investments). Multiple regression analysis is the best approach because it allows the auditor to regress the change in investment income on more than one independent variable.