QUESTION: Powell, Inc. has 100,000 shares of common stock outstanding with a $10 per share par value. In addition, the company has 20,000 shares of preferred stock outstanding with a $100 par value. On this preferred stock, there is a 4% annual dividend that is cumulative. What does the term "cumulative" mean in this situation?

A) The current and any missed dividends must be paid on the preferred stock shares before any dividends can be paid to the owners of the common stock.

B) The preferred stock dividend must be paid each year.

C)If the preferred stock dividend is not paid in one year, it must be paid the following year.

D) If the preferred stock dividend is not paid in one year, an additional (or penalty) dividend must be paid in the subsequent period. unanswered