ACCT 3044 Chapter 15B

Which of the following is the formula for computing EPS?

• (Net income + Preferred dividends) ÷ Weighted average number of common shares outstanding

• (Net income – Preferred dividends) ÷ Weighted average number of common shares outstanding

• (Net income – Preferred dividends) ÷ Average number of shares outstanding

• Net income ÷ Number of shares outstanding

What is the numerator of the diluted EPS calculation when convertible preferred stock is included?

• Net income + Preferred dividends (Net of tax effect).

• Net income – Preferred dividends.

• Net income + Preferred dividends

• Net income.

Detachable stock warrants outstanding should be classified as

• contingent liabilities.

• prepaid expenses.

• reductions of capital contributed in excess of par value.

• paid-in capital.

Which earnings per share amounts are reported in a complex capital structure?

• Diluted EPS only.

• Basic and simple EPS.

• Basic EPS only.

• Basic and diluted EPS.

The treasury stock method of computing incremental shares applies to:

• convertible bonds only.

• convertible preferred stock only.

• all convertible securities.

• stock options and warrants.