Which of the Following Statements Is True Regarding Dividends on Preferred

question 74

Multiple Choice

Which of the following statements is true regarding dividends on preferred stock?

• A) Preferred shareholders are guaranteed an annual dividend.
• B) Preferred shareholders will receive a dividend if common shareholders are paid.
• C) Preferred dividends in arrears are a current liability.
• D) Preferred dividends in arrears are either a current or long-term liability, depending upon when the corporation last declared a dividend.

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Definitions:

Gratuitous Agency

An agency relationship where the agent agrees to act on behalf of another party, the principal, without receiving any compensation.

Duty Of Obedience

A legal or ethical obligation requiring individuals to follow the lawful orders and policies of an organization or authority.

Duty Of Loyalty

A legal obligation requiring individuals to act in the best interests of another party, typically in a fiduciary relationship.

Agency Relationship

A legal bond where one party, the agent, acts on behalf of another party, the principal, in a business transaction.