When Using the If-Converted Method to Compute Diluted Earnings Per

question 47

Multiple Choice

When using the if-converted method to compute diluted earnings per share,convertible securities should be

• A) included only if antidilutive.
• B) included only if dilutive.
• C) included whether dilutive or not.
• D) not included.

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Definitions:

Allowance for Doubtful Accounts

A contra-asset account that reduces the total amount of accounts receivable to reflect those that are expected to go uncollected.

Uncollectible

Accounts receivable that cannot be recovered or are very unlikely to be paid by debtors.

Income Statement Approach

An analytic method focusing on revenues and expenses to determine the net income of a business within a specific period.