How should cumulative preference dividends in arrears be shown in a corporation's statement of financial position?
A)Note disclosure
B)Increase in shareholders' equity
C)Increase in current liabilities
D)Increase in current liabilities for the amount expected to be declared within the year or operating cycle, and increase in non-current liabilities for the balance

Question

Quizplus · Accepted Answer

Cumulative preference dividends in arrears are not recognized as liabilities until they are declared. Therefore, they should be disclosed in the notes to the financial statements rather than being included in the liabilities section.

How Should Cumulative Preference Dividends in Arrears Be Shown in a Corporation's