Which of the following is true about cumulative preference shares?
Answer Details
Cumulative preference shares are a type of preference shares in which any unpaid dividend is carried forward to the next year. This means that if a company is unable to pay dividends in a particular year, the unpaid amount is accumulated and added to the next year's dividend payment. Therefore, option A is correct.
Option B is incorrect because cumulative preference shareholders do not have the right to a capital refund. Option C is also incorrect because cumulative preference shareholders do not have the right to share in further profits beyond the fixed dividend rate. Option D is also incorrect because unpaid dividends are carried forward, not forfeited. Finally, option E is incorrect because the dividend declared is not accumulated in a reserve account, but paid out to shareholders.