Which of the following is a current liability?
A) Preferred dividends in arrears
B) A dividend payable in the form of additional shares of stock
C) A cash dividend payable to preferred stockholders
D) All of these answers are correct.

Question

Quizplus · Accepted Answer

A current liability is an obligation that is expected to be settled within one year or the operating cycle of a business, whichever is longer. Preferred dividends in arrears and a dividend payable in the form of additional shares of stock are not expected to be settled within one year and are therefore not current liabilities. However, a cash dividend payable to preferred stockholders is an obligation that is expected to be settled within one year and is therefore a current liability.

Which of the Following Is a Current Liability