Which of the following is the correct description of dividends in arrears, as it applies to cumulative preferred stock?

Question

Quizplus · Accepted Answer

Dividends in arrears refer to the cumulative amount of dividends that were not paid in previous years. This term is typically used in reference to cumulative preferred stock, where dividends must be paid before any dividends can be paid to common shareholders. If a company fails to pay dividends on its cumulative preferred stock in a particular year, those dividends will accumulate and become dividends in arrears.

Which of the Following Is the Correct Description of Dividends