Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

12. Stockholders' Equity

Dividends and Dividend Preferences

Financial Accounting

12. Stockholders' Equity

Dividends and Dividend Preferences

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Multiple Choice

Which of the following are the two main types of preferred dividends?

Stock and cash

Cumulative and noncumulative

Participating and nonparticipating

Declared and undeclared

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Verified step by step guidance

Understand the concept of preferred dividends: Preferred dividends are payments made to preferred shareholders, who have a higher claim on a company's assets and earnings than common shareholders.

Recognize the two main types of preferred dividends: These are categorized based on how unpaid dividends are treated and whether they accumulate over time.

Define cumulative preferred dividends: These are dividends that accumulate if not paid in a given period. The company must pay these accumulated dividends before paying any dividends to common shareholders.

Define noncumulative preferred dividends: These are dividends that do not accumulate if unpaid. If the company skips a dividend payment, the preferred shareholders have no claim to those missed payments in the future.

Differentiate cumulative and noncumulative dividends from other terms: Terms like 'participating,' 'nonparticipating,' 'declared,' and 'undeclared' describe other characteristics of dividends but are not the primary classifications of preferred dividends.