1-What are the principal differences between common stock and preferred stock? 2
ID: 2532864 • Letter: 1
Question
1-What are the principal differences between common stock and preferred stock?2-Preferred stock may be cumulative. Discuss what this feature means for the shareholder of cumulative preferred stock.
3-How are dividends in arrears presented in the financial statements? 1-What are the principal differences between common stock and preferred stock?
2-Preferred stock may be cumulative. Discuss what this feature means for the shareholder of cumulative preferred stock.
3-How are dividends in arrears presented in the financial statements?
2-Preferred stock may be cumulative. Discuss what this feature means for the shareholder of cumulative preferred stock.
3-How are dividends in arrears presented in the financial statements?
Explanation / Answer
1. the difference between two is that the holders of common stock have voting priviliges and preffered stock holder don't have. most common stock gives the owner one vote per number of shares owned, although that is not always the case.
2. cumulative preffered stock is a type of prefered stock with a provision that stipulates that if any payment of dividend missed in the past , the dividends owed must be first paid to cumulative shareholders.
3. past ommitted dividends on cumilative preffered stock. generally these ommitted dividends were not declared, and, therefore do not appear on corporation's balancr sheet as liability .therefore they must be disclose in asset side.
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