In Computing Diluted Earnings Per Share, the Treasury Stock Method

question 148

Multiple Choice

In computing diluted earnings per share, the treasury stock method is used for:

• A) Stock warrants.
• B) Stock splits.
• C) Reverse stock splits.
• D) Convertible preferred stock.

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Definitions:

Special Account

An account designated for a particular purpose or offering special conditions or privileges.

Compounded Monthly

A method of calculating interest where the interest earned each month is added to the principal, so the investment grows at an increasing rate.

Compounded Annually

A method of calculating interest in which the accumulated interest is added to the principal at the end of each year, with future interest then calculated on the new total.

Percentage Increase

A measure of the degree to which a quantity has grown in proportion to its initial value, expressed as a percentage.