Which of the following statements is not correct in relation to cumulative preference shares?
A) Holders of cumulative preference shares are guaranteed a dividend every year.
B) Undeclared cumulative preference share dividends accumulate, or carry forward, to future periods.
C) The accumulated amount of any cumulative preference share dividend plus the current year's preference dividend must be paid before any dividend can be paid to ordinary shareholders.
D) Cumulative preference share dividends that are not declared in the year they are due are called dividends in arrears.

Question

Quizplus · Accepted Answer

Holders of cumulative preference shares are not guaranteed a dividend every year. Rather, they are guaranteed to receive all of their missed or undeclared dividends (known as dividends in arrears) before any dividends are paid to ordinary shareholders.

Which of the Following Statements Is Not Correct in Relation