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 statements is true regarding dividends?

Preferred shareholders are paid dividends before common shareholders.

Dividends are always paid in cash.

Common shareholders have a fixed dividend rate.

Dividends must be paid every year regardless of company profits.

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Verified step by step guidance

Understand the concept of dividends: Dividends are payments made by a corporation to its shareholders, typically as a distribution of profits. They can be paid in cash, stock, or other forms, but are not guaranteed to be paid every year.

Review the characteristics of preferred shareholders: Preferred shareholders generally have priority over common shareholders when it comes to dividend payments. This means they are paid dividends before common shareholders.

Analyze the statement 'Dividends are always paid in cash': This is incorrect because dividends can also be paid in other forms, such as stock dividends or property dividends.

Evaluate the statement 'Common shareholders have a fixed dividend rate': This is incorrect because common shareholders typically receive dividends that vary based on company performance and decisions by the board of directors, unlike preferred shareholders who may have a fixed dividend rate.

Assess the statement 'Dividends must be paid every year regardless of company profits': This is incorrect because dividends are discretionary and depend on the company's profitability and board decisions. Companies are not obligated to pay dividends every year.