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What does it mean when preferred stock has a cumulative feature?

What does it mean when preferred stock has a cumulative feature?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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What does it mean when preferred stock has a cumulative feature? A.A dividend must be paid to the preferred stockholders each year. B. A dividend cannot be paid to the common stockholders. C. If dividends were not paid to preferred stockholders in previous years, these dividends must be paid before any dividends are paid to the common stockholders. D. The stockholders have the right to share in extra dividends. Please explain why the option is correct and remaining incorrect in detail explain each and every option in detail with explanation
Transcribed Image Text:What does it mean when preferred stock has a cumulative feature? A.A dividend must be paid to the preferred stockholders each year. B. A dividend cannot be paid to the common stockholders. C. If dividends were not paid to preferred stockholders in previous years, these dividends must be paid before any dividends are paid to the common stockholders. D. The stockholders have the right to share in extra dividends. Please explain why the option is correct and remaining incorrect in detail explain each and every option in detail with explanation
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