Which of the Following Statements Is True with Regard to 7

question 240

Multiple Choice

Which of the following statements is true with regard to 7% cumulative, participating preferred stock?

• A)Stockholders who hold this type of stock are guaranteed a dividend each year.
• B)The issue price of this stock is reported in the preferred stock account on the balance sheet.
• C)If the corporation pays a per share dividend in excess of 7% of the preferred stock's par value and there are no dividends in arrears, the preferred shares will receive a share of the amounts available for distribution as dividends to other classes of stock.
• D)If dividends are not declared, they accumulate and a liability must be reported on the balance sheet for any amount in arrears that is owed to the preferred stockholders.

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