How Should Dividends in Arrears Be Shown on a Corporation's

question 115

Multiple Choice

How should dividends in arrears be shown on a corporation's balance sheet?

• A)As an increase in liabilities.
• B)In a note or in the body of the financial statements.
• C)As a decrease in assets.
• D)As an increase in stockholders' equity.

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Definitions:

Inventory

The total amount of goods and materials held by a company for the purpose of resale or production.

Default Percent

The percentage of loans or debts that are not paid back in accordance with the terms agreed upon by borrowers and lenders.

Variable Cost

A cost that varies with the level of output or sales, such as materials and labor costs.

Monthly Interest Rate

The percentage of interest charged on a monthly basis on loans or credited to deposit accounts.