If a preference share dividend cannot be paid in a particular year and will then accrue as a liability until the funds are available,the preference shares are known as:
A) cumulative preference shares
B) participating preference shares
C) non-participating preference shares
D) redeemable preference shares

Question

Quizplus · Accepted Answer

Cumulative preference shares are those in which dividends accrue and accumulate over time if they cannot be paid in a particular year. This means that any unpaid dividends will be carried forward and treated as a liability until such time as the funds are available to pay them. Participating preference shares, on the other hand, allow the shareholders to participate in the profits of the company beyond the fixed dividend rate they are entitled to. Non-participating preference shares do not give the shareholders any right to participate in the profits of the company, beyond the fixed dividend rate. Redeemable preference shares are those that can be redeemed by the company at a future date, usually after a specified period of time has elapsed.

If a Preference Share Dividend Cannot Be Paid in a Particular