When preferred stock is cumulative preferred dividends not declared in a period are
A) considered a liability.
B) called dividends in arrears.
C) distributions of earnings.
D) never paid.

Question

Quizplus · Accepted Answer

Cumulative preferred stock dividends not declared in a period are considered dividends in arrears. This means they continue to accumulate from period to period until they are paid. They are not considered a liability until they are actually declared.

When Preferred Stock Is Cumulative Preferred Dividends Not Declared in a Period