A Cumulative Dividend Preference Means That

question 119

Multiple Choice

A cumulative dividend preference means that:

• A)preferred stockholders are paid dividends before common stockholders are paid dividends for the current year only.
• B)unpaid dividends to preferred stockholders accumulate and must be paid before common stockholders receive dividends.
• C)preferred stockholders are paid their full fixed dividend rate each period as long as the company is in operation.
• D)unpaid cash dividends to preferred stockholders must be replaced with stock dividends during the current period.

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Definitions:

Actual Output

The real quantity of goods or services produced by a company during a specific period, as opposed to planned or theoretical output.

Labor Efficiency Variance

The variance between the real hours spent working and the anticipated standard hours, times the standard rate of labor.

Actual Direct Labor Rate

The actual amount paid per hour to workers who are directly involved in the production of goods or services.

Labor Rate Variance

The difference between the actual cost of direct labor and the standard cost, indicating how well the company is managing its labor costs.