In Determining Basic Earnings Per Share, the Annual Dividend on Nonconvertible

question 31

Multiple Choice

In determining basic earnings per share, the annual dividend on nonconvertible cumulative preferred shares should be:

• A)Deducted from net income whether declared or not.
• B)Deducted from net income only if declared.
• C)Added back to net income whether declared or not.
• D)Disregarded.

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Definitions:

Price Elasticity

A measure of how responsive the quantity demanded of a good is to a change in its price.

Demand Curve

The number of units of a product that people would be willing to purchase at different price levels.

Supply Curve

A graphical representation of the relationship between the price of a good or service and the quantity supplied for a given period.

Substitute Choices

Options available that can replace or serve as alternatives to others, usually in the context of consumer goods or services.