Before dividends can be paid to common stockholders,if the preferred stock is ________,any ________ must be paid to the preferred stockholders.
A)cumulative;dividends in arrears
B)current;interest owed
C)cumulative;interest owed
D)managing;dividends

Question

Quizplus · Accepted Answer

A cumulative dividend preference states that if all or a part of the current dividend is not paid in full,the cumulative unpaid amount,known as dividends in arrears,must be paid before any future common dividends can be paid.Of course,if the preferred stock is noncumulative,dividends can never be in arrears;any preferred dividends that are not declared are permanently lost.

Before Dividends Can Be Paid to Common Stockholders,if the Preferred