Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Accounting for Shares

Question:

Which of the following preference shareholders can not claim any unpaid dividend of the year?

Options:

Equity shareholders

Participating preference shareholders

Cumulative preference shareholders

Non- Cumulative preference shareholders

Correct Answer:

Non- Cumulative preference shareholders

Explanation:

The features of non-cumulative preference shares are as follows:
They are issued with pre-determined dividend rates, either as a percentage of the face value or in terms of dollar per.
These shareholders are paid their dividends before making the dividend payments to the common shareholders. The unpaid dividends of these stockholders are not carried forward to future years.
The issuing companies can resume making the dividend payments at any time without any regard to unpaid dividends.