Is the corporation legally liable to its preferred stockholders for these dividends? How should this…

What do the terms cumulative and noncumulative mean in regard to preferred stock?

What are dividends in arrears, and how should they be disclosed in the financial statements?

A corporation has 1,000 shares of 8 percent, USD 200 par value, cumulative, preferred stock outstanding. Dividends on this stock have not been declared for three years. Is the corporation legally liable to its preferred stockholders for these dividends? How should this fact be shown in the balance sheet, if at all?

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