Which Statement Below Is True Regarding EPS and a Company's

question 66

Multiple Choice

Which statement below is true regarding EPS and a company's financial statements?

• A)EPS is based on the weighted- average shares of common stock outstanding for an accounting period.
• B)An EPS figure should be calculated and presented for each significant element of net income on the income statement.
• C)EPS based on the actual outstanding number of common shares of stock is called diluted EPS.
• D)The EPS calculation never takes into consideration preferred stock or preferred stock dividends.

---

Definitions:

Variable Costing

An accounting method that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in product costs, excluding fixed overhead from inventory valuation.

Fixed Overhead

Recurring operating expenses that remain relatively constant regardless of the level of production or business activity.

Net Income

The total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue.

Inventory

Products and items that a company keeps with the final intention of selling or further processing.