When Preferred Shares Are Cumulative and the Board of Directors

question 41

True/False

When preferred shares are cumulative and the board of directors passes on a dividend, the amount in arrears must be shown as a liability on the statement of financial position and a reduction from retained earnings on the statement of shareholders' equity and the statement of financial position.

---

Definitions:

Voltage Flows

Incorrect terminology; voltage does not flow, but rather it is a measure of the electrical potential difference between two points.

Neutral Conductor

A conductor that is connected to a point of zero voltage in an electrical system, providing a return path for current in circuits where a neutral point is used.

Potential

Refers to the potential energy per unit charge at a point in a field or circuit, often associated with voltage or electric potential difference.

Coulomb

The standard unit of electric charge in the International System of Units (SI), equivalent to the charge transported by a constant current of one ampere in one second.