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Dividends in arrears on cumulative 





1.	Which of the following is not a right or preference associated with preferred stock?
a.	The right to vote
b.	First claim to dividends
c.	Preference to corporate assets in case of liquidation
d.	To receive dividends in arrears before common stockholders receive dividends



	2.	Cooke Corporation issues 10,000 shares of $50 par value preferred stock for cash at $90 per share. The entry to record the transaction will consist of a debit to Cash for $900,000 and a credit or credits to
a.	Preferred Stock for $900,000.
b.	Preferred Stock for $500,000 and Paid-in Capital in Excess of Par—Preferred Stock for $400,000.
c.	Preferred Stock for $400,000 and Paid-in Capital from Preferred Stock for $500,000.
d.	Paid-in Capital from Preferred Stock for $900,000.
		

3.	Cooke Corporation issues 10,000 shares of $50 par value preferred stock for cash at $60 per share. In the stockholders' equity section, the effects of the transaction above will be reported
a.	entirely within the capital stock section.
b.	entirely within the additional paid-in capital section.
c.	under both the capital stock and additional paid-in capital sections.
d.	entirely under the retained earnings section.



	4.	Dividends in arrears on cumulative preferred stock
a.	are shown in stockholders’ equity of the balance sheet.
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.



5.	Dividends in arrears on cumulative preferred stock
a.	are considered to be a non-current liability.
b.	are considered to be a current liability.
c.	only occur when preferred dividends have been declared.
d.	should be disclosed in the notes to the financial statements.





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