Which of the Following Statements Is True When Dividends Are

Multiple Choice

Which of the following statements is true when dividends are not declared or paid on cumulative preferred stock?

A) The shareholders must be allowed to convert their shares to common stock.
B) The unpaid dividends are accrued as a liability.
C) The unpaid dividends are reported in a note to the financial statements.
D) The unpaid dividends accrue interest until paid.