If a Corporation Has Dividends in Arrears of $25,000 on Its

question 131

Multiple Choice

If a corporation has dividends in arrears of $25,000 on its cumulative preferred shares, it must:

• A)Pay the dividends in arrears before it can pay dividends to its common shareholders.
• B)Capitalize this amount as a part of permanent capital.
• C)Appropriate retained earnings for this amount.
• D)Set aside cash for the amount of the dividends.