If a Corporation Has Dividends in Arrears on Preferred Shares

question 99

Multiple Choice

If a corporation has dividends in arrears on preferred shares, they should also:

• A)Declare the dividends.
• B)Record a liability for the dividends.
• C)Capitalize retained earnings for the dividends.
• D)Report the dividends in arrears.

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Definitions:

Economies of Scale

Refers to the cost advantage experienced by an entity due to expansion in production, leading to lower per-unit costs.

Diseconomies of Scale

The phenomenon where production costs per unit increase as the scale of operation or output increases.

Output

In economics, the amount of goods or services produced by a business, industry, or economy.