Which of the following is the correct description of dividends in arrears,as it applies to cumulative preference shares?
A)The amount of dividends that will be paid in the coming year
B)The cumulative amount of dividends which were not paid in previous years
C)The amount of dividends that were paid late
D)The cumulative amount of dividends that were paid in previous years

Question

Quizplus · Accepted Answer

Dividends in arrears refer to the cumulative amount of dividends which were not paid in previous years. This is particularly relevant for cumulative preference shares, where dividends must be paid out in full before any dividends can be paid to common shareholders. If a company misses a dividend payment on cumulative preference shares, it accumulates as dividends in arrears until it is paid in full.

Which of the Following Is the Correct Description of Dividends