Farnon Company has not declared or paid dividends on its cumulative preferred stock in the last three years. These dividends should be reported

Name: Farnon Company has not declared or paid dividends on its cumulative preferred stock in the last three years. These dividends should be reported
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Question

Quizplus · Accepted Answer

Cumulative preferred dividends in arrears are not a legal obligation until declared, so they are disclosed in a note to the financial statements rather than recorded as a liability.

Farnon Company Has Not Declared or Paid Dividends on Its