Which of the Following Is Correct Regarding the Effect That

question 30

Multiple Choice

Which of the following is correct regarding the effect that dilutive convertible bonds have on the earnings per share computation?

• A) The number of shares the bonds would convert to is added to the denominator;interest,net of tax,is subtracted from the numerator.
• B) The number of shares the bonds would convert to is added to the denominator;interest net of tax is added to the numerator.
• C) The number of shares the bonds would convert to is subtracted from the denominator;interest,net of tax,is subtracted from the numerator.
• D) The number of shares the bonds would convert to is subtracted from the denominator;interest,net of tax,is added to the numerator.

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Definitions:

Tax Imposition

The process by which a government or authority imposes a financial charge or levy upon a taxpayer.

Supply

The total amount of a specific good or service that is available to consumers, often influenced by the product's price.

Demand

The desire, willingness, and ability of consumers to buy goods and services at various price points at a specific time.

Tax

A compulsory financial charge imposed by a government on individuals or entities to fund public expenditures.