Dividends in arrears on cumulative preferred shares
A)never have to be paid,even if common dividends are paid.
B)must be paid before common shareholders can receive a dividend.
C)should be recorded as a current liability until they are paid.
D)enable the preferred shareholders to share equally in corporate profit with the common shareholders.

Question

Quizplus · Accepted Answer

Dividends in arrears on cumulative preferred shares must be paid before any dividends can be distributed to common shareholders. Cumulative preferred shares have a feature that requires any missed dividends to be paid out before common dividends.

Dividends in Arrears on Cumulative Preferred Shares