When Preferred Stock Is Cumulative and the Directors Either Do

question 110

Short Answer

When preferred stock is cumulative and the directors either do not declare a dividend to preferred stockholders or declare one that does not cover the total amount of cumulative dividends, the unpaid amount is called ________.

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Definitions:

Total Fixed Costs

The sum of all costs that remain constant regardless of the level of production or output in a business.

Variable Costs

Costs that change in proportion to the good or service that a business produces.

Fixed Costs

Expenses that do not change with the amount of goods or services produced by a business.

Sunk Costs

Sunk costs refer to expenses that have already been incurred and cannot be recovered, and therefore should not affect future business decisions.