Question

Which one of the following is Commitment?

Options

• Proposed Dividend

• Interim Dividend

• Unpaid/Unclaimed Dividend

• Dividend Arrears on Cumulative Preference Shares

Answer 1

Dividend Arrears on Cumulative Preference Shares

Explanation:

While technically, Dividend Arrears on cumulative preference shares are not actual liabilities (because dividends are payable only when declared), they accumulate year after year until declared, must be paid before equity dividends, And represent a moral and contractual obligation to cumulative preference shareholders.