Which of the Following Statements About Preferred Stock Is True

question 17

Multiple Choice

Which of the following statements about preferred stock is true?

• A) Unlike dividends paid on common stock, dividends paid on preferred stock are a tax-deductible expense.
• B) Unpaid dividends on preferred stock are a debt of the corporation.
• C) If preferred dividends are non-cumulative, then preferred dividends not paid in a particular year will be carried forward to the next year.
• D) There is no difference in the voting rights of preferred and common stockholders.
• E) None of these.

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Definitions:

Seniority-based Pay

A compensation strategy where employees' wages are determined by the length of their service or tenure in the company, rewarding loyalty and experience.

Righttosue Clause

A provision within a contract or law that grants an individual the authority to pursue legal action should their rights be violated.

Just Cause

A legal standard that employers must meet to justify disciplinary actions or termination, proving that actions taken were due to reasonable grounds.

Economic Reason

Refers to motivations or justifications based on economic factors, such as cost, efficiency, or profitability.