Question

The 2017 financial statements of Meadowlark Corporation report that the company paid dividends of $21,825,000 to its preferred shareholders before paying dividends to its common shareholders. This practice is called: (A) Liquidation preference (B) Treasury preference (C) Dividend preference (D) Stock ownership preference (E) None of the above

Answer 1

the correct answer is

(C) Dividend preference

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Answer 2

Answer:C. Dividend preference

Explanation: The practice of Meadowlark Corporation paying the dividends of its preferred shareholders before that of its common share holder is known as 'dividend preference'. Dividend preference refers to preferred shareholders receiving dividends on their shares before common shareholders receive their dividends. It implies that preferred shareholders have priority or preference over common shareholders when it comes to dividend distributions.