The 2017 financial statements of Meadowlark Corporation report that the company paid dividends of $21,825,000 to its preferred shareholders before paying dividends to its common shareholders.
This practice is called:
A) Liquidation preference
B) Treasury preference
C) Dividend preference
D) Stock ownership preference
E) None of the above

Question

Quizplus · Accepted Answer

Dividend preference refers to the priority given to preferred shareholders to receive dividends before common shareholders. This is a common feature of preferred stock, as illustrated by Meadowlark Corporation's practice.

The 2017 Financial Statements of Meadowlark Corporation Report That the Company