Basic Earnings Per Share and Fully Diluted Earnings Per Share

question 89

Multiple Choice

Basic earnings per share and fully diluted earnings per share are calculated for a corporation

• A) with a complex capital structure.
• B) that has both preferred shares and common shares issued.
• C) that has cumulative preferred dividends in arrears.
• D) that has a disposal of a segment of the business and an extraordinary item reported on its income statement.

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Definitions:

Workers' Compensation

A form of insurance providing wage replacement and medical benefits to employees injured in the course of employment.

FICA

Refers to the Federal Insurance Contributions Act taxes, which are payroll taxes paid by both employees and employers to fund Social Security and Medicare.

Overtime Earnings

Compensation received for hours worked in excess of the standard workweek hours, often calculated at a rate higher than the regular hourly rate.

Liability Accounts

Accounts on a balance sheet that represent what a company owes to others, such as loans, accounts payable, mortgages, deferred revenues, and accrued expenses.