Chapter 11, Problem 7E

To determine

Cumulative Preferred Stock:

It is a type of stock which consists of a clause which says that if any past year dividend is not paid then it should be paid in the next accounting year before any dividend of equity shares.

Noncumulative Preferred Stock:

In this type of stock, when any dividends get missed then it is not paid in the next accounting period.

Nonparticipating Preferred Stock:

In this type preference shareholder does not receive any amount greater than normal dividends under any circumstances.

Participating Preferred Stock:

Participating preference shareholders receive extra dividend if the dividend paid to the equity shareholder exceed the dividend of preference shareholder, up to the limit of extra dividend paid to equity shareholder.

To identify: Characteristic of the following statement.