Dividends in Arrears on Cumulative Preferred Stock

question 10

Multiple Choice

Dividends in arrears on cumulative preferred stock

• A)never have to be paid, even if common dividends are paid.
• B)must be paid before common stockholders can receive a dividend.
• C)should be recorded as a current liability until they are paid.
• D)enable the preferred stockholders to share equally in corporate earnings with the common stockholders.

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Definitions:

Desired Resource

An asset, material or immaterial, that individuals or organizations strive to obtain in order to fulfill specific needs or objectives.

Allocentric

Characterized by or thinking about others and the community more than oneself; opposite of egocentric.

Individualistic Orientation

A viewpoint or personal philosophy that prioritizes individual goals and rights over those of the group or collective.

Contact Hypothesis

A theory suggesting that under appropriate conditions interpersonal contact is one of the most effective ways to reduce prejudice between majority and minority group members.