When a Corporation Has Outstanding Both Common and Preferred Stock

question 20

Multiple Choice

When a corporation has outstanding both common and preferred stock:

• A) Basic and diluted earnings per share are reported only if the preferred stock is cumulative.
• B) Earnings per share are reported for each type of stock outstanding.
• C) Earnings per share are computed without regard to the amount of dividends declared on preferred stock.
• D) Earnings per share are computed without regard to the amount of dividends declared on common stock.

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Definitions:

Subjective

Based on or influenced by personal feelings, tastes, or opinions, rather than external facts.

Allocate

The process of distributing resources or tasks among projects or departments based on necessity or a strategic plan.

Common Supplies

Tangible items used in daily operations that are considered current assets, such as office supplies.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company.