The Denominator Used in the Calculation of Basic Earnings Per

question 98

Multiple Choice

The denominator used in the calculation of basic earnings per share is the

• A)number of common shares outstanding at the end of the year.
• B)number of preferred shares outstanding at the end of the year.
• C)weighted average number of common shares outstanding during the year.
• D)weighted average number of common shares and preferred shares outstanding during the year.

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Definitions:

Holder in Due Course

A party who has acquired a negotiable instrument in good faith and for value, thus having certain protections against defenses and claims that could be raised by prior parties.

Shelter Principle

A legal concept that allows a person who receives goods in good faith without knowledge of a defect in the title to sell them with a clear title.

Holder

A party in possession of a negotiable instrument.

Bearer

An individual in possession of a negotiable instrument or security that is payable to whomever holds the document.