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Preference shareholders have the first claim to dividend before common shareholders are paid.
- A. true
- B. false
Step by step
Solved in 3 steps
- What are dividends in arrears? How do they affect the allocation of dividends to preference and ordinary shareholder if: Preference share capital are noncumulative Preference share capital are cumulativePreference share that is given a right to share with the ordinary share in dividends in excess of a stated dividend rate is said to be * a. cumulative b. participating c. non cumulative d. non participatingDividends declared on redeemable preference shares are recognized O By a debit to retained earnings O By a credit to retained earnings O In a profit or loss In other comprehensive income
- Preference shareholders have O a Preferential right as to dividend only Ob. Preferential right in the management Oc. Preferential right as to repayment of capital at the time of liquidation of the company Od. Preferential right as to dividend and repayment of capital at the time of liquidation of the CompanyIn computing basic EPS, the amount of preference dividends onnoncumulative preference shares should be A. deducted from net income whether declared or notB. deducted from net income only when declaredC. added to net income only when declaredD. ignoredWith the use of examples, distinguish between Preference dividend and ordinary dividend
- Which of the following is not a characteristic that sets preferred stock apart from common stock?A. voting rightsB. dividend paymentsC. transferabilityD. ownershipThe distribution of a dividend that represents a partial return of the original investment made by the shareholders is known as a. participating dividend. b. liquidating dividend. c. property dividend.Which feature of preference shares would most likely be opposed byordinary shareholders? A. callableB. convertibleC. participatingD. redeemable
- The cost of dividend payable on redeemable preference shares should be included in______. Select one: a. in the statement of income after identifying profit after tax b. in the statement of income before identifying the profit before tax c. as a deduction in the statement of changes in equity d. in the statement of income as a deduction prior to identifying profit from operationsIf preference share is participating, it means that they are not entitled to the excess of basic allocation of dividends. * O True O FalseDefine Preferred dividends.
