If dividends are not declared in any year, they must be made up in a later year before dividends can be declared and paid to common stockholders.

Dividends not declared for prior years on cumulative preferred stock are deemed to be "dividends in arrears."

no liability exists for dividends in arrears because a liability cannot exist until the board of directors declares a dividend.

Disclosure is required in the footnotes.

If the corporate charter does not state that preferred stock is cumulative, the courts consider the preferred stock to be cumulative.