Which of the following statements is correct concerning stock dividends?
A)common stock dividends cannot be paid if preferred stock dividends are in arrears.
B)preferred stock dividends cannot be paid if common stock dividends are in arrears.
C)neither common nor preferred dividends can be paid if accrued interest is in arrears.
D)no stock dividends can be paid if the firm has no cash.

Question

Quizplus · Accepted Answer

According to most common dividend policies, preferred dividends must be paid before common dividends. Therefore, if preferred dividends are in arrears, common dividends cannot be paid.

Which of the Following Statements Is Correct Concerning Stock Dividends