Dividends in Arrears on Cumulative Preference Shares

question 148

Multiple Choice

Dividends in arrears on cumulative preference shares

• A) are shown in equity in the statement of financial position.
• B) must be paid before ordinary shareholders can receive a dividend.
• C) should be recorded as a current liability until they are paid.
• D) enable the preference shareholders to share equally in corporate earnings with the ordinary shareholders.

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Definitions:

Uniform Commercial Code

A comprehensive set of laws governing commercial transactions in the United States, designed to harmonize legal standards across states.

Substantial Interest

A significant stake or investment in a matter or entity, indicating a strong concern or potential influence on decisions.

Original Obligor

The party originally obligated to repay a debt or fulfill a contractual obligation before any assignments or transfers of the obligation.

Delegable Duty

A responsibility or duty that can be transferred or assigned from one party to another, often seen in contexts of employment or contractual agreements.