If the Preference Share of a Corporation Is Cumulative

question 38

Multiple Choice

If the preference share of a corporation is cumulative:

• A) Dividends on preference share are guaranteed.
• B) Dividends cannot be declared in an amount less than that stated on the share certificate.
• C) Preference shareholders participate in dividends paid in excess of a stated amount on the ordinary shares.
• D) Dividends in arrears must be paid on preference share before any dividend can be paid on ordinary share.

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Definitions:

Order Cost

The total expenses incurred in placing and receiving an order, including production, shipping, and handling fees.

Variable Cost Per Unit

The cost that varies with each unit of production or service provided.

Net 30 Credit Policy

A payment term indicating that the payment for goods or services is due 30 days after the invoice date, often used in business-to-business transactions.

Monthly Interest Rate

The interest rate applied to a loan or investment for one month, often used to calculate the monthly interest payments or earnings.