The difference between cumulative and noncumulative preferred stock is that

Question 3 options:

	There is no practical difference between cumulative and noncumulative preferred stock.
	holders of noncumulative preferred stock do not have the right to be paid dividends from a given year if no dividends are declared on the preferred stock in that year.
	cumulative preferred stock dividends that are not paid in a given year become a liability called Cumulative Preferred Dividends Payable.
	the number of cumulative preferred stock shares accumulates over the years based on a multiple of the number of shares owned.