YZ Company has $20,000 of dividends in arrears.Based on this information, which of the following statements is false?
A)Dividends in arrears are not considered to be liabilities.
B)An obligation for dividends in arrears exists only after the board of directors declares payment.
C)The investment community looks favorably on companies with dividends in arrears since the money is redirected toward more important growth opportunities.
D)The amount of dividends in arrears should be disclosed in the notes to the financial statements.

Question

Quizplus · Accepted Answer

The investment community generally does not look favorably on companies with dividends in arrears, as it may indicate financial difficulties or an inability to meet shareholder expectations.

YZ Company Has $20,000 of Dividends in Arrears