Dividends in arrears that must be paid to the preferred stockholders before payment of dividends to common stockholders are ________.
A) cumulative
B) nonparticipating
C) participating
D) convertible

Question

Quizplus · Accepted Answer

Dividends in arrears that must be paid to preferred stockholders before payment to common stockholders are known as cumulative preferred stock. This means that if the company cannot pay the preferred dividend in a given period, the amount will accumulate and eventually be paid to the preferred stockholders before any dividends are paid to the common stockholders.

Dividends in Arrears That Must Be Paid to the Preferred