The cumulative feature of preference share limits the amount of cumulative dividends to the par value of the preference sharerequires that dividends not paid in any year must be made up in a later year before dividends are distributed to ordinary shareholdersmeans that the shareholder can accumulate preference share until it is equal to the par value of ordinary share at which time it can be converted into ordinary share.enables a preference stockholder to accumulated dividends until they equal the par value of the stock and receive the stock in place of the cash dividends.

The preference shareholders have the right to receive the dividend before any other shareholders.

Answered: The cumulative feature of preference…

10th Edition

ISBN:9781259964947

Author:Libby

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Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The cumulative feature of preference share

limits the amount of cumulative dividends to the par value of the preference share

requires that dividends not paid in any year must be made up in a later year before dividends are distributed to ordinary shareholders

means that the shareholder can accumulate preference share until it is equal to the par value of ordinary share at which time it can be converted into ordinary share.

enables a preference stockholder to accumulated dividends until they equal the par value of the stock and receive the stock in place of the cash dividends.

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