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) Common and preferred dividends must be paid simultaneously.
D) No stock dividends can be paid if the firm has no cash.

Question

Quizplus · Accepted Answer

Preferred stock dividends must be paid before common stock dividends. Therefore, if preferred stock dividends are in arrears, common stock dividends cannot be paid.

Which of the Following Statements Is Correct Concerning Stock Dividends