A Company Has Not Declared a Dividend on Its Cumulative

Multiple Choice

A company has not declared a dividend on its cumulative preferred stock for the past three years. What is the required accounting treatment or disclosure in this situation?

A) Record a liability for cumulative amount of preferred stock dividends not declared.
B) Disclose the amount of the dividends in arrears.
C) Record a liability for the current year's dividends only.
D) No disclosure or recognition is required.