Question

1. All of the following accurately describe preferred stock except:
   1. Carries a fixed dividend rate
   2. Receives preference in distribution of dividends and/or distribution of assets upon liquidation
   3. Carries voting rights
   4. Is typically issued at par value
2. Which of the following statements most accurately describes cumulative stock?
   1. A form of common stock in which the fixed dividend rate accumulates over time, if not paid
   2. A form of preferred stock in which the market value grows cumulatively, over time
   3. Any share of stock that accumulates additional value, over time
   4. A form of preferred stock in which the fixed dividend obligation accumulates, if not paid
3. Which of the following statements most accurately describes non-cumulative stock?  
   1. A form of common stock in which the fixed dividend obligation does not accumulate, if not paid
   2. A form of preferred stock in which the fixed dividend obligation does not accumulate, or accrue, if not paid
   3. Any share of stock that does not appreciate, or grow in value over time
   4. A form of preferred stock in which the market value decreases, over time.
4. All of the following accurately discuss how cash dividends are determined except:  
   1. Any preferred dividend obligation is considered first, before allocating remaining dividend available to common stockholders
   2. Preferred stockholders are paid based on a fixed dividend rate
   3. Common stockholder dividends are determined based on the number of shares held
   4. Common stockholder dividends are paid based on a fixed dividend rate
5. Dividends in a corporation play a similar role to _____________in the partnership and proprietorship structures.
   1. Owner withdrawals
   2. Net income
   3. Owner/partner salaries
   4. None of the above

Answer 1

1)

All of the following accurately describe preferred stock except:

C. Carries voting rights

Reason: Main difference between common stock & Preference stock is preference stock does not have voting rights

2)

Which of the following statements most accurately describes cumulative stock?

D. A form of preferred stock in which the fixed dividend obligation accumulates, if not paid

3)

Which of the following statements most accurately describes non-cumulative stock?

B. A form of preferred stock in which the fixed dividend obligation does not accumulate, or accrue, if not paid

4)

All of the following accurately discuss how cash dividends are determined except:

D. Common stockholder dividends are paid based on a fixed dividend rate

5)

Dividends in a corporation play a similar role to _____________in the partnership and proprietorship structures.

A. Owner withdrawals

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