If preferred shares are cumulative, the
A) preferred dividends not declared in a given year are called dividends in arrears.
B) preferred shareholders and the common shareholders receive equal dividends.
C) preferred shareholders and the common shareholders receive the same total dollar amount of dividends.
D) common shareholders will share in the preferred dividends.

Question

Quizplus · Accepted Answer

Cumulative preferred shares mean that if dividends are not paid in a given year, they accumulate and must be paid out before any dividends can be distributed to common shareholders. These unpaid dividends are known as dividends in arrears.

If Preferred Shares Are Cumulative, the