Which of the Following Statements About Preferred Stock Is True

question 35

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 the above.

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Definitions:

Owners

Individuals or entities that hold legal title and the rights of possession and use of property or goods.

Not-For-Profit Corporations

Organizations that use their surplus revenues to achieve their goals rather than distributing them as profit or dividends.

Shareholders

Individuals or entities that own shares in a corporation, thereby having ownership interest and potentially influence over the company.

Surplus Revenue

Excess income over expenditures generated by an organization, government, or company.