How should dividends in arrears be shown on a corporation's balance sheet?
A)As an increase in liabilities.
B)In a note or in the body of the financial statements.
C)As a decrease in assets.
D)As an increase in stockholders' equity.

Question

Quizplus · Accepted Answer

Dividends in arrears are dividends that have been earned by shareholders, but not yet paid by the corporation. They are not considered a liability or a decrease in assets, and cannot be included in stockholders' equity until they are actually paid. Therefore, they are usually disclosed in a note or in the body of the financial statements, but not reported on the balance sheet itself.

How Should Dividends in Arrears Be Shown on a Corporation's