Dividends in Arrears on Cumulative Preferred Shares

question 57

Multiple Choice

Dividends in arrears on cumulative preferred shares

• A) are considered to be a non-current liability.
• B) are considered to be a current liability.
• C) only occur when preferred dividends have been declared.
• D) should be disclosed in the notes to the financial statements.

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Definitions:

Selling and Administrative

Expenses related to the selling of products and the administration of business operations, excluding manufacturing costs.

Variable Cost

Variable costs are expenses that vary in relation to the level of goods or services produced, such as raw materials and direct labor costs.

Fixed Cost

The costs that remain constant in total regardless of changes in the level of activity within a relevant range.

Budgeted Cash Disbursements

A projection or forecast of cash payments that a business expects to make over a specific period.