Question

When a corporation has both common stock and preferred stock outstanding:

Answer 1

Answer:

D. dividends on preferred stock must be paid before dividends on common stock can be paid.

Explanation:

While distributing the dividend to the shareholders we give the first preference to the preference shareholder then the remaining dividend is distributed to the equity shareholders.  

As the distribution of dividend is not compulsory but whenever the company earns a profit during a particular year it will distribute the dividend according to their investment amount

Hence, d option is right