Question

Which of the following is true related to cumulative dividends? They are a popular feature for...

Which of the following is true related to cumulative dividends?

They are a popular feature for the issuance of common stock.

Require that dividends be paid to the employees first before outside investors.

Requires that all unpaid prior year and current year dividends must be first paid to preferred shareholders.

Requires that all unpaid prior year dividends must be first paid to common shareholders.
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer : - Requires that all unpaid prior year and current year dividends must be first paid to preferred shareholders

Reason :-

Cumulative dividend is an option given to preference shareholders which gives the company to option to accumulate the preference dividend instead of making payment each year. When company decides to pay dividend if it has cumulative dividend then it is Required to first pay all unpaid prior year and current year dividends to preferred shareholders.

It is an option given to preference shareholders so it is not common feature of common stock. Employees are not entitled to any dividend without holding any shares. The cumulative dividend option is for preference shareholders, so the statement Requires that all unpaid prior year dividends must be first paid to common shareholders is false.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
The cumulative feature of preference shares a. limits the amount of cumulative dividends to the par...
The cumulative feature of preference shares a. limits the amount of cumulative dividends to the par value of the preference shares. b. requires that preference dividends not paid in any year must be made up in a later year before dividends are distributed to ordinary shareholders. c. means that the shareholder can accumulate preference shares until it is equal to the par value of ordinary shares at which time it can be converted into ordinary shares. d. enables a preference...
1. Which of the following statements is not true? Preferred dividends are tax deductible, therefore, preferred...
1. Which of the following statements is not true? Preferred dividends are tax deductible, therefore, preferred stock is similar to debt Preferred stockholders receive dividends at a pre-specified rate. Dividends in arrears and the current period’s preferred dividend must be paid before common shareholders can receive a dividend if the preferred stock is cumulative. Preferred stock is unlike debt because preferred stockholders receive dividends in a given year only if they are declared. 2. Toledo Corporation reacquired 2,500 shares of...
Question#3: Cash Dividends with Cumulative Preferred Stock       Tucker Exports has the following stock outstanding: 25,000...
Question#3: Cash Dividends with Cumulative Preferred Stock       Tucker Exports has the following stock outstanding: 25,000 shares of $80 par value, 6% cumulative preferred stock 150,000 shares of $2.50 par value, common stock The company declares and pays the following dividends for the past four years: 2017              $ 65,000 2018              $412,000 2019              $303,000 2020              No dividends are paid Compute the total cash dividends paid to each class of stock in 2017 through 2020 using the following table. Arrearage Preferred Common...
A “cumulative” provision on preferred stock (PS) Group of answer choices provides that the current year...
A “cumulative” provision on preferred stock (PS) Group of answer choices provides that the current year dividend on PS must be paid before any dividends can be paid to common stock holders, but makes no such promise with regard to arrearages from prior years. gives the issuer of PS the right to issue (sell) additional PS at a known price within a specified time period. provides that the current year dividend on PS, as well as any arrearages from prior...
Before a company can pay dividends to the common shareholders, the owners of cumulative preferred shares...
Before a company can pay dividends to the common shareholders, the owners of cumulative preferred shares must receive Select one: a. dividends in arrears, but not the current year's dividends b. the current year's dividend, but not dividends in arrears c. all dividends in arrears plus the current year's dividend d. neither the current year's dividends nor dividends in arrears
7. Which of the following is TRUE? Stock prices should fall by the amount of the...
7. Which of the following is TRUE? Stock prices should fall by the amount of the dividend on the Payment Date. Large shareholders prefer cumulative voting Companies issue rights to existing shareholders to prevent dilution All of the above are true 8.              Which of the following statements is TRUE? a.              Owners of preferred stock have greater voting rights than common shareholders. b.              In case of bankruptcy, preferred stock gets paid before common stock c.              Companies are more likely to issue preferred stock if they...
In each case in the following? table, how many dollars of preferred dividends per share must...
In each case in the following? table, how many dollars of preferred dividends per share must be paid to preferred stockholders before common stock dividends are? paid? The amount of preferred dividends that must be paid in Case A before common dividends are paid is ?$ nothing. ?(Round to the nearest? cent.) A Cumulative $120 $7.80 2 B Noncumulative $80 5.0% 4 C Noncumulative $150 $3.75 1 D Cumulative $100 4.5% 5 E Cumulative $140 7.0% 0
Halverstein Company's outstanding stock consists of 9,450 shares of cumulative 5% preferred stock with a $10...
Halverstein Company's outstanding stock consists of 9,450 shares of cumulative 5% preferred stock with a $10 par value and 4,050 shares of common stock with a $1 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends. Dividends Declared & Paid Year 1 $ 0 Year 2 $ 8,100 Year 3 $ 36,000 The amount of dividends paid to preferred and common shareholders in Year 2 is: Multiple Choice $4,725 preferred;...
Sweet Company’s outstanding stock consists of 1,400 shares of cumulative 6% preferred stock with a $100...
Sweet Company’s outstanding stock consists of 1,400 shares of cumulative 6% preferred stock with a $100 par value and 11,400 shares of common stock with a $10 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends. Dividends Declared & Paid Year 1 $ 3,400 Year 2 $ 7,400 Year 3 $ 39,000 The amount of dividends paid to preferred and common shareholders in year 3 is:
Assume that all of TKO's common and preferred stock is issued and outstanding. TKO has not...
Assume that all of TKO's common and preferred stock is issued and outstanding. TKO has not issued dividends in the last five (5) years. (Thus, there are five past years of unpaid dividends.) The company now has $8.2 million in surplus available for the issuance of dividends. The Board votes to issue the entire amount as dividends. Assume that all of TKO's common and preferred stock is issued and outstanding. TKO has not issued dividends in the last five (5)...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT