When Calculating Earnings Per Share, Dividends Declared on Noncumulative Preferred

question 1

Multiple Choice

When calculating earnings per share, dividends declared on noncumulative preferred stock, but not paid, should be

• A)added to net income in the earnings per share numerator
• B)excluded from the earnings per share numerator
• C)deducted from net income in the earnings per share numerator
• D)deferred from the earnings per share numerator until paid

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Definitions:

Economic Growth

An increase in the production of goods and services in an economy over a period of time.

Short-Term Capital Gain

Profit from the sale of an asset held for less than a year, subject to tax at ordinary income tax rates.

Net Working Capital

Represents a measure of a firm's liquidity by calculating the excess of current assets over current liabilities, portraying the company's operational efficiency.

Current Assets

Assets owned by a company that are expected to be converted into cash, sold, or consumed within one year or within the business's normal operating cycle.