Answer the following statements true (T) or false (F)
1. When a company has issued both preferred and common stock, the common stockholders receive their
dividends first.
2. A corporation will never pay dividends on treasury stock.
3. Noncumulative preferred stock is in arrears if the dividend has not been paid for the year.
4. With a stock dividend, the total number of shares issued and outstanding increases, and the percentage
of total ownership of individual stockholders also increases.
5. Stock dividends have no effect on the total amount of stockholders' equity.
1. FALSE
2. TRUE
3. FALSE - Explanation: A cumulative preferred stock is in arrears if the dividend has not been paid for the year.
4. FALSE - Explanation: With a stock dividend, the total number of shares issued and outstanding increases, but the percentage of total ownership of individual stockholders stays the same.
5. TRUE
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Answer the following statement true (T) or false (F)
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