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Ellen
Ellen, Lawyer, Accountant and Researcher
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Which of the following is a current liability? a. Preferred

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Which of the following is a current liability?
a. Preferred dividends in arrears
b. A dividend payable in the form of additional shares
c. A cash dividend payable to preferred stockholders
d. All

My first instinct is to go with d, but I don't think dividends in arrears is.

WebLaw :

*This chat is not intended as legal advice. It is general information that may or may not apply to your situation and should not be relied upon.*

WebLaw :

c

WebLaw :

A dividend payable in the form of additional shares involves capitalizing (charging) retained earnings equal to the market value of the stock distributed.

WebLaw :


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Customer: replied 4 years ago.
So, would dividends in arrears not be a current liability? I was thinking that it wasn't but then I thought that it does have to be paid, so it would be.
No dividends in arrears is not a liability until it is declared
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Customer: replied 4 years ago.
Okay, thank you. I had not thought of the declaration part. Makes complete sense now.