If preferred shares are noncumulative, then:
A)Cash dividends not declared in prior years are lost permanently.
B)The preferred shareholders are entitled to current and arrears of dividends before common shareholders can receive dividends.
C)Prior years' cash dividends must be paid to the preferred shareholders before any dividends may be paid to the common shareholders.
D)The preferred shareholders are only entitled to a specific percent of the cash dividends, regardless of the amount declared.

Question

Quizplus · Accepted Answer

Noncumulative preferred shares do not accumulate unpaid dividends. If a dividend is not declared in a given year, preferred shareholders lose the right to those dividends permanently.

If Preferred Shares Are Noncumulative, Then