Reference no: EM132965230

Problem 1: Which one of the following statements about preferred stock is true?

A. Unlike dividends paid on common stock, dividends paid on preferred stock are a tax-deductible expense.

B. Dividends on preferred stock payable during the next twelve months are considered to be a corporate liability.

C. If preferred dividends are non-cumulative, then preferred dividends not paid in a particular year will be carried forward to the next year.

D. There is no significant difference in the voting rights granted to preferred and common shareholders.

E. Preferred stock has a preference over common stock in the payment of dividends and in the distribution of corporation assets in the event of liquidation.