Which of the Following Statements Is Not Correct in Relation

question 6

Multiple Choice

Which of the following statements is not correct in relation to cumulative preference shares?

• A) Holders of cumulative preference shares are guaranteed a dividend every year.
• B) Undeclared cumulative preference share dividends accumulate, or carry forward, to future periods.
• C) The accumulated amount of any cumulative preference share dividend plus the current year's preference dividend must be paid before any dividend can be paid to ordinary shareholders.
• D) Cumulative preference share dividends that are not declared in the year they are due are called dividends in arrears.

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Definitions:

Margin Of Safety

The difference between the actual or expected profitability of a project and the break-even point, often used as a risk assessment measure.

Contribution Format

An income statement format that separates fixed and variable costs, highlighting the contribution margin.

Income Statement

An accounting document reflecting a business's earnings, outlays, and gains for a particular period.

Tile Manufacturer

A company specializing in the production of tiles, which are pieces of hard-wearing material such as ceramic, stone, or metal used for covering roofs, floors, walls, or other objects.