A ____ requires that dividends cannot be paid on common stock until all current and previously omitted dividends are paid on preferred stock.

Question

Quizplus · Accepted Answer

The cumulative provision is a clause in the preferred stock that ensures that unpaid dividends accumulate and must be paid before any dividends can be paid on common stock. This means that if the company is unable to pay dividends in a given year, the payments will accumulate and must be paid before any dividends can be paid to common shareholders.

A ____ Requires That Dividends Cannot Be Paid on Common