Which Statement About Dividends Is Correct

question 16

Multiple Choice

Which statement about dividends is correct?

• A)Dividends on cumulative preferred shares are not discretionary payments.
• B)Dividends are mandatory payments required for both common and preferred shares.
• C)Dividends are discretionary payments that can be made for common and preferred shares.
• D)Dividends must be paid on common shares before dividends can be paid on preferred shares.

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Definitions:

Asset Retirement Obligation

A legal obligation associated with the retirement of a tangible long-lived asset, where the liability is recognized in the period in which it incurs.

Indefinite-Lived Intangible

Non-physical assets without a fixed life and which do not amortize, such as trademarks or brand names, that have potential value as long as they are used by the company.

Impairment

The decrease in an asset's value on a company's financial statements, reflecting that the asset is worth less than its carrying amount.

Annually

Occurring once every year.