When Computing Earnings Per Share on Common Stock,dividends on Cumulative,nonconvertible

question 52

Multiple Choice

When computing earnings per share on common stock,dividends on cumulative,nonconvertible preferred stock should be

• A) deducted from net income only if the dividends were declared or paid in the current period.
• B) deducted from net income regardless of whether the dividends were not paid or declared in the period.
• C) deducted from net income only if net income is greater than the dividends.
• D) ignored.

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Definitions:

Sarbanes-Oxley Act

A U.S. federal law enacted in 2002 designed to protect investors from fraudulent financial reporting by corporations, improving the accuracy and reliability of corporate disclosures.

Corporate Disclosures

Information that a company is required to make public, revealing important financial, operational, or governance details to stakeholders.

NAFTA

The North American Free Trade Agreement, a treaty between the United States, Canada, and Mexico that eliminated most tariffs on trade between them.

Corporate Governance

The system of rules, practices, and processes by which a company is directed and controlled, balancing the interests of stakeholders.