Cumulative preferred stock means that ________.
A)the fixed dividend amount accumulates from year to year.The entire amount of all past unpaid dividends must be paid to the preferred shareholders before any dividends can be paid to common shareholders
B)the preferred dividend rate will increase each year the shares are outstanding
C)preferred dividends accumulate as earnings accumulate
D)the balance in the Preferred stock account is increased by any additional shares that are sold during the year

Question

Quizplus · Accepted Answer

Cumulative preferred stock means that any unpaid dividends accumulate from year to year and must be paid out to the preferred shareholders before any dividends can be paid to common shareholders. This is different from non-cumulative preferred stock, where any unpaid dividends do not accumulate and are simply forgone by the shareholders.

Cumulative Preferred Stock Means That ________