Earnings per share

Question 1

all public entities are required to present EPS on the face of the ______ ________

Answer 1

income statement

Question 2

A simple capital structure has only ______ _______ outstanding and presents only ______ EPS

Answer 2

common stock; basic

Question 3

Entities that present basic and diluted EPS are said to have _________ capital structures

Answer 3

complex

Question 4

If a discontinued operation or an extraordinary item is reported, ______ and _______ per share amounts must be presented

Answer 4

basic; diluted

Question 5

Basic EPS =

Answer 5

NI - preferred dividends / weighted average number of common shares outstanding

Question 6

The calculation of WACSO includes the beginning shares ______ + shares _____ during the period - shares _______ + stock dividends and stock splits - reverse stock splits

Answer 6

outstanding; sold; reacquired

Question 7

Stock dividends and stock splits must be treated as they they occurred at the _________ of the period

Answer 7

beginning

Question 8

An entity has a ______ capital structure when it has securities that can potentially be converted to common stock and would therefore dilute EPS

Answer 8

complex

Question 9

Diluted EPS =

Answer 9

NI - preferred dividends + interest on dilutive securities / WACSO, assuming all dilutive securities are converted to common stock

Question 10

The _______ ______ method assumes that the proceeds from the exercise of stock options, warrants, and their equivalents will be used by the company to repurchase treasury shares at the prevailing market price, resulting in an incremental increase in shares outstanding

Answer 10

treasury stock

Question 11

Options and similar instruments are only dilutive when the average ________ price of the underlying CS exceeds the _______ price of the options or warrants

Answer 11

market; exercise

Question 12

Treasury stock method to find additional shares outstanding =

Answer 12

of shares - (# of shares x exercise price)/avg market price

Question 13

Do not include the assumed conversion if it is __________

Answer 13

antidilutive

Question 14

If it is presumed that a contract will be settled in common stock, it should be ______ in diluted EPS

Answer 14

included

Question 15

Contingent shares (that are dilutive) are also included in the calculation of _____ EPS if all conditions for issuance are met.

Answer 15

basic

Question 16

Contingent shares (that are dilutive) are _____ in the calculation of basic earnings per share (EPS) if (and as of the date) all conditions for issuance are met. Stock options are ______ from the calculation of basic EPS.

Answer 16

included; excluded

Question 17

In computing the weighted-average number of shares outstanding for earnings per share (EPS) determination, a ______ _______ to the same class of shareholders must be retroactively recognized and treated as if it had occurred at the beginning of the year.

Answer 17

stock dividend

Question 18

Shares issuable upon the exercise of a stock option are ___ ________ contingent shares as the option holder is required to pay the strike price to exercise the options.

Answer 18

not considered

Question 19

When computing basic earnings per share, convertible securities are ______ for purposes of computing the weighted average of common shares outstanding.

Answer 19

ignored

Question 20

In determining earnings per share, interest expense, net of applicable income taxes, on convertible debt that is dilutive should be ______ for diluted EPS but ______ for basic EPS

Answer 20

added back; ignored