Question 8
Business FinanceWhich of the following is true about cumulative preference shares?
- A.Any unpaid dividend is carried forward
- B.The shareholders can obtain a capital refund
- C.They are entitled to further share in profit
- D.any unpaid dividend is forfeited
- E.The dividend declared is accumulated in a reserve account
Show the answer and explanation
Answer: A (Any unpaid dividend is carried forward)
Explanation
With cumulative preference shares, dividends missed in a bad year are carried forward and paid later.