Which of the Following Transactions Decreases Earnings Per Share

question 51

Multiple Choice

Which of the following transactions decreases earnings per share?

• A)Declaring cash dividends payable to the common stockholders.
• B)Purchasing treasury stock.
• C)The accrual of revenue.
• D)Declaring and distributing a 10% common stock dividenD.Issuing additional shares of common stock via a stock dividend increases the number of common shares outstanding and therefore decreases earnings per share.

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Definitions:

Child Support Payment

Payments made by a noncustodial parent to assist with the financial support of their children.

Alimony Payment

Payments made to a spouse or ex-spouse under a divorce or separation agreement, potentially deductible for the payer.

Deductible Student Loan Interest

Refers to the interest paid on a qualified student loan which may be deducted from income when calculating federal income tax.

Self-Employed Health Insurance

A tax deduction available to self-employed individuals for premiums paid on medical, dental, and long-term care insurance for themselves and their dependents.