Not paying the dividends on a cumulative preferred issue may result in:
A)preferred dividend arrears that can be eliminated by the common shareholders only after common dividends are paid.
B)voting rights are granted to preferred stockholders if preferred dividends are in arrears.
C)no payment of dividends to common shareholders.
D)Both A and B.
E)Both B and C.

Question

Quizplus · Accepted Answer

If preferred dividends are in arrears, common shareholders cannot receive dividends until the arrears are paid, and preferred stockholders may be granted voting rights.

Not Paying the Dividends on a Cumulative Preferred Issue May