When Computing Earnings Per Share

question 129

Multiple Choice

When computing earnings per share

• A) an adjustment related to preferred stock dividends is made in the numerator and denominator of the earnings per share formula.
• B) an adjustment for the preferred dividends is made in the denominator of the earnings per share formula.
• C) the dividends for cumulative preferred stock are deducted from net income only if the preferred dividends have been declared.
• D) the dividends for cumulative preferred stock are deducted from net income whether or not preferred dividends have been declared.

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Definitions:

Reasonableness

A standard of rational behavior, decisions, or actions, based on fairness, legality, and morality in a given context.

Precise Definition

An exact and clear explanation or description of a concept, term, or phenomenon.

Confession Evidence

Testimony or statements admitting to criminal activity, which can be used as evidence in court to support the prosecution’s case against the defendant.

Indicator

A measure or metric used to evaluate or predict the performance, health, or quality of something.