Which Statement About Dividends Is Correct

question 16

Multiple Choice

Which statement about dividends is correct?

• A)Dividends on cumulative preferred shares are not discretionary payments.
• B)Dividends are mandatory payments required for both common and preferred shares.
• C)Dividends are discretionary payments that can be made for common and preferred shares.
• D)Dividends must be paid on common shares before dividends can be paid on preferred shares.

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Definitions:

Matching Principle

An accounting principle that recognizes expenses in the same period as the revenues they are related to are earned.