Match each description with the characteristic of preferred stock that it best describes. A. Cumulative B. Noncumulative C. Nonparticipating D. Participating 1. Receives current and all past dividends before common stockholders receive any dividends. 2. Receives dividends exceeding the stated rate under certain conditions. 3. Not entitled to receive dividends in excess of the stated rate. 4. Loses any dividends that are not declared in the current year.

Match each of the following preferred stock features with its description.Preferred Stock                       Features Description 1. Convertible             a. Prior unpaid dividends receive priority. 2. Redeemable           b. Shares can be sold at a predetermined price. 3. Cumulative            c. Shares can be exchanged for common stock.

Which of the following methods should be used to account for the conversion of preferred stock to common stock?   Book Value Market Value I. Yes No II. Yes Yes III. No Yes IV. No No III IV I II