How Should Cumulative Preferred Dividends in Arrears Be Shown on the Balance

question 95

Multiple Choice

How should cumulative preferred dividends in arrears be shown on the balance sheet?

• A) as an increase in shareholders' equity
• B) as an increase in current liabilities
• C) as an increase in current liabilities for the amount expected to be declared within the next year, and as an increase in long-term liabilities for the balance
• D) by note disclosure only

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Definitions:

Commercial Insurers

Private entities that provide a range of health insurance plans and policies to individuals and businesses, operating for profit.

Actuarial

Pertaining to actuaries or the statistical and mathematical methods they use to calculate risk, especially in the insurance and finance industries.

Community Risk

The potential for harm or adverse effects on a community due to external or internal variables.