Dividends in arrears on cumulative preferred stock
a. never have to be paid, even if common dividends are paid.
b. must be paid before common stockholders can receive a dividend.
c. should be recorded as a current liability until they are paid.
d. enable the preferred stockholders to share equally in corporate earnings with
the common stockholders.
Ans: b. must be paid before common stockholders can receive a dividend.
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