In Calculating Diluted Earnings Per Share, Dividends on Non-Convertible Cumulative

question 62

Multiple Choice

In calculating diluted earnings per share, dividends on non-convertible cumulative preferred shares should be

• A) ignored.
• B) deducted from net income whether declared or not.
• C) deducted from net income only if declared.
• D) added back to net income whether declared or not.

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Definitions:

Market Maker

An entity that buys and sells securities from their own inventory to maintain liquidity and facilitate trading in financial markets.

Widgets

A generic term often used to refer to any product or manufactured good.

Equilibrium Quantity

The quantity of goods or services supplied is exactly equal to the quantity of goods or services demanded at the market equilibrium price.

Demand

The amount of a product or service that buyers are ready and able to buy at different prices over a specified time frame.