Dividends in Arrears on Cumulative Preference Shares Are Considered a Liability

question 199

True/False

Dividends in arrears on cumulative preference shares are considered a liability.

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Definitions:

Promissory Note

A written, legally binding promise to pay a specified sum of money to a designated person at a specified date or upon demand.

Compounded Semiannually

Interest calculation method that applies the interest to the principal balance and the accumulated interest twice each year.

Simple Annualized Yield

A calculation of investment earnings that does not account for compounding within the year, expressed as an annual rate.

Effective (Annualized) Yield

The effective, or annualized yield, calculates the return on an investment by taking into account the effect of compounding interest over a one-year period.