When preferred stock has a preference as to dividends,the current year's preferred dividend must be paid before a dividend can be paid to common stockholders.

Question

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When preferred stock has a preference as to dividends, it means that the preferred stockholders have the right to receive their dividend before any dividend can be paid to common stockholders. Therefore, the current year's preferred dividend must be paid first.

When Preferred Stock Has a Preference as to Dividends,the Current