A Company Pays Cash Dividends on Preferred Stock

question 79

Multiple Choice

A company pays cash dividends on preferred stock. If the company prepares the statement of cash flows using the indirect method or the direct method, where would this transaction appear?

• A)The payment of cash dividends would be presented in the financing activities section as a cash payment under both methods.
• B)The payment of cash dividends would be presented in the investing activities section as a cash payment under both methods.
• C)The payment of cash dividends would be presented in the operating activities section as a reduction in net income under the indirect method and as a cash payment under the direct method.
• D)The payment of cash dividends would be presented in the non-cash investing and financing activities section under both methods.

---

Definitions:

Workforce Reduction

The process of decreasing a company's employee numbers as part of a strategy to cut costs, improve efficiency, or adjust to market demands.

Distributive Justice

The perceived fairness of how resources and rewards are distributed within a society or organization.

Downsized

Having undergone a process where a company reduces its workforce to lower costs and improve efficiency, often resulting in layoffs.

Legal Equality

The principle that all individuals are equal before the law and have the same rights and obligations regardless of other personal traits.