Which of the Following Statements Regarding Earnings Per Share Is

question 76

Multiple Choice

Which of the following statements regarding earnings per share is not correct?

• A) It can be reported on the income statement.
• B) The numerator is net income.
• C)The denominator is the average number of shares of common stock outstanding.
• D)It does not have to be disclosed on the income statement or the notes to the financial statements.

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Definitions:

Gross Profit

Represents the difference between a company's revenue from sales and its cost of goods sold, before deducting overhead, payroll, taxation, and interest payments.

Perpetual Inventory System

An approach in accounting where the transaction of buying or selling inventory is instantly documented through computerized point-of-sale systems and software for enterprise asset management.

Credit Memo

A document issued by a seller to a buyer, reducing the amount owed by the buyer under specified circumstances, like returns or discounts.

Closing Entries

Journal entries made at the end of an accounting period to transfer the balances of temporary accounts to permanent accounts, thereby preparing the books for the next period.