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

Preferred Stock

Financial Accounting

12. Stockholders' Equity

Preferred Stock

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Which of the following statements about preferred stock ownership is true?

Preferred stockholders generally receive dividends before common stockholders.

Preferred stockholders have voting rights equal to those of common stockholders.

Preferred stockholders have a higher claim on assets than bondholders in the event of liquidation.

Preferred stock dividends are always guaranteed and must be paid every year.

Previous problemNext problem

Verified step by step guidance

Understand the characteristics of preferred stock: Preferred stock is a type of equity that typically provides shareholders with a fixed dividend and priority over common stockholders in receiving dividends and assets during liquidation.

Analyze the first statement: 'Preferred stockholders generally receive dividends before common stockholders.' This is true because preferred stockholders have priority in dividend distribution over common stockholders.

Analyze the second statement: 'Preferred stockholders have voting rights equal to those of common stockholders.' This is generally false because preferred stockholders typically do not have voting rights, unlike common stockholders.

Analyze the third statement: 'Preferred stockholders have a higher claim on assets than bondholders in the event of liquidation.' This is false because bondholders have a higher claim on assets than both preferred and common stockholders during liquidation.

Analyze the fourth statement: 'Preferred stock dividends are always guaranteed and must be paid every year.' This is false because preferred dividends are not guaranteed; they are only paid if the company declares them, and unpaid dividends may accumulate if the stock is cumulative preferred stock.