Under GAAP cumulative preferred dividends are reported as liabilities only
Under GAAP, cumulative preferred dividends are reported as liabilities only after they have been declared by the corporation’s board of directors. For the following debate, support your arguments by referring to the SFAC No. 6 definition of liabilities and the consequent characteristics of liabilities.
Team Debate:
Team 1: Argue that cumulative preferred dividends are liabilities, even if they are not declared. Team 2: Argue that cumulative preferred dividends are not liabilities unless they are declared.

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