If Preferred Stock Is Cumulative, Then

question 82

Multiple Choice

If preferred stock is cumulative, then

• A)preferred dividends are a percentage of corporate profits.
• B)dividends in arrears must be paid before common shareholders receive dividends.
• C)dividends are a percentage of the market value of the preferred stock.
• D)payment of dividends is legally guaranteed to shareholders each year.

---

Definitions:

Prime Costs

A business's direct costs of materials and labor that are associated with the production of goods or services.

Idle Time

The period of time when resources, such as employees or machines, are available but not in use or producing, often resulting in inefficiency.

Overhead

All indirect costs of running a business that cannot be directly attributed to a specific product or service.

Equipment Breakdown

The failure or malfunction of machinery or equipment, interrupting regular operations.