According to the Statement of Financial Accounting Standards No

question 2

Multiple Choice

According to the Statement of Financial Accounting Standards No. 5, "Accounting Contingencies," if the likelihood of a loss or payment is "remote," a contingent liability should be disclosed:

• A) On the balance sheet
• B) On the income statement
• C) In the footnotes to the financial statements
• D) None of the above

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Definitions:

Basic EPS

A measure of a company's profitability, calculated as net income divided by the number of outstanding shares of common stock; stands for Basic Earnings Per Share.

Diluted EPS

Earnings per share calculated using the potential conversion of dilutive securities, showing the possible decrease in earnings per share if these were converted.

Convertible Bonds

Bonds that can be converted into a predetermined number of shares of the issuing company's stock at certain times during their life, usually at the discretion of the bondholder.

Common Stock

A form of corporate equity ownership, a type of security that represents ownership in a corporation and a claim on part of the corporation's profits.