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

question 4

Multiple Choice

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

• A)An EPS figure should be calculated and presented for each significant element of net income on the income statement.
• B)EPS is based on the weighted-average shares of preferred stock outstanding for an accounting period.
• 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.

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Definitions:

Expense Matching

An accounting principle that states expenses should be recorded in the same period as the revenues they helped to generate, to accurately match income with expenses.

Cause and Effect

A relationship where one event (the cause) leads to the outcome of another event (the effect).

Systematic Allocation

The methodical distribution of costs or revenues across different accounts, periods, or projects to match expenses with related revenues.

Expense Recognition

The accounting principle dictating that expenses are recorded when incurred, not necessarily when paid.