Question
The class of preference share, where the arrears in the
dividends are carried forward and paid out of the profits of the subsequent years are called as:Solution
Cumulative preference shares have a special feature that allows any unpaid dividends to accumulate and be paid out of the profits of future years, if and when the company has sufficient profits. If the company is unable to pay dividends in a particular year or if it pays only a part of the dividend due, the unpaid amount is carried forward to subsequent years, and it accumulates until it is paid in full.
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