Preferred Stockholders Have Priority Over Common Stockholders with Respect to Dividends

question 2

True/False

Preferred stockholders have priority over common stockholders with respect to dividends, because dividends must be paid on preferred stock before they can be paid on common stock.However, preferred and common stockholders normally have equal priority with respect to liquidating proceeds in the event of bankruptcy.

---

Definitions:

Depreciation Expense

The allocated amount of the cost of a tangible or physical asset over its useful life, reflecting the asset’s consumption, wear and tear, or obsolescence.

Benefit The Company

Actions or strategies that enhance the performance, profitability, or competitive advantage of a company.

Cost of Equipment

The original value of equipment, including purchase price and any other expenses required to get the equipment ready for its intended use.

Expensed

Expensed is the recognition of a cost as an expense on the income statement in the period in which it is incurred, rather than capitalizing it as part of an asset.