What Type of Preferred Share Is Entitled to Dividends Above

question 62

Multiple Choice

What type of preferred share is entitled to dividends above its specified dividend if the common shares receive excess dividends and must receive dividends in arrears before the common dividends can be declared?

• A)Cumulative and participating
• B)Cumulative and nonparticipating
• C)Redeemable and participating
• D)Redeemable and cumulative

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Definitions:

Total Credits

In accounting, the sum of all credit entries recorded, representing increases in liabilities, revenue, or equity.

Consolidated Income

The total net income of a parent company and its subsidiaries, after accounting for the share of income pertaining to noncontrolling interests.

Subsidiaries

Companies that are owned or controlled by another company, known as the parent company, through a majority of the voting stock.