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    Diluted Earnings Per Share

    Uploaded by

    Gletzmar Igcasama
    This document contains a 10 question quiz on diluted earnings per share (EPS) reporting standards. Some key points covered are: - Basic and diluted EPS should be reported in the income statement. - An entity must present basic and diluted EPS for discontinued operations either on the income statement or in the notes. - The calculation of diluted EPS assumes share options were exercised and proceeds used to increase net income. - Options and warrants are dilutive if the exercise price is lower than the average market price. - Diluted EPS shows the maximum possible dilution of earnings from instruments that are convertible to ordinary shares.

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    Diluted Earnings Per Share

    Uploaded by

    Gletzmar Igcasama
    53 views2 pages
    This document contains a 10 question quiz on diluted earnings per share (EPS) reporting standards. Some key points covered are: - Basic and diluted EPS should be reported in the income statement. - An entity must present basic and diluted EPS for discontinued operations either on the income statement or in the notes. - The calculation of diluted EPS assumes share options were exercised and proceeds used to increase net income. - Options and warrants are dilutive if the exercise price is lower than the average market price. - Diluted EPS shows the maximum possible dilution of earnings from instruments that are convertible to ordinary shares.

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    Multiple choice questions with answer key

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    Diluted Earnings per share

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    This document contains a 10 question quiz on diluted earnings per share (EPS) reporting standards. Some key points covered are: - Basic and diluted EPS should be reported in the income statement. - An entity must present basic and diluted EPS for discontinued operations either on the income statement or in the notes. - The calculation of diluted EPS assumes share options were exercised and proceeds used to increase net income. - Options and warrants are dilutive if the exercise price is lower than the average market price. - Diluted EPS shows the maximum possible dilution of earnings from instruments that are convertible to ordinary shares.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    53 views2 pages

    Diluted Earnings Per Share

    Uploaded by

    Gletzmar Igcasama
    This document contains a 10 question quiz on diluted earnings per share (EPS) reporting standards. Some key points covered are: - Basic and diluted EPS should be reported in the income statement. - An entity must present basic and diluted EPS for discontinued operations either on the income statement or in the notes. - The calculation of diluted EPS assumes share options were exercised and proceeds used to increase net income. - Options and warrants are dilutive if the exercise price is lower than the average market price. - Diluted EPS shows the maximum possible dilution of earnings from instruments that are convertible to ordinary shares.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Rodlyn Shane U.

    Anasco
    BSA- 3
    Updates in Financial Reporting Standards
    Topic: Diluted Earnings Per Share
    1. Where in the financial statements should basic and diluted Earnings per share be
    reported?
    A. In the accompanying notes
    B. In management discussion and analysis
    C. In the income statement
    D. In the statement of cash flows
    2. An entity that reports a discontinued operation shall present basic and diluted
    earnings per share for the discontinued operation
    A. Only on the face of the income statement.
    B. Only in the notes to financial statements.
    C. Either on the face of the income statement or in the notes to financial
    statements.
    D. Only if management chooses to do so.
    3. The calculation of diluted earnings per share assumes that share options were
    exercised and that the proceeds were used to
    A. Buy ordinary shares as an investment
    B. Retire preference shares
    C. Buy treasury shares
    D. Increase net income
    4. Options and warrants are dilutive if
    A. The exercise price is lower than the average market price.
    B. The exercise price is higher than the average market price.
    C. The exercise price is equal to the average market price.
    D. The option shares represent 20% of ordinary shares.
    5. When applying the treasury share method for diluted earnings per share, the market
    price of the ordinary shares used for the assumed acquisition of treasury shares is the
    A. Market price at the end of the year
    B. Average market price during the year
    C. Market price at the beginning of the year
    D. Average market price over a two- year period
    6. Dilution of Earnings per share is defined as
    A. Decrease in earnings per share when any financial instrument is converted to any
    form of share capital.
    B. Decrease in share capital.
    C. Decrease in earnings per share when convertible instruments are converted to
    ordinary shares.
    D. Decrease in earnings per share when share capital is converted to debt capital.
    7. In calculating whether potential ordinary shares are dilutive, the income figure used
    as the control number is
    A. Net income including discontinued operations
    B. Income from continuing operations
    C. Income before tax including discontinued operations
    D. Retained earnings for the year after dividends
    8. The purpose of diluted earnings per share is to
    A. Provide a comparison figure for debt holders.
    B. Indicate earnings shareholders shall receive in future periods.
    C. Distinguish between entities with a complex capital structure and entities with a
    simple capital structure.
    D. Show the maximum possible dilution of earnings.
    9. In calculating diluted earnings per share, which of the following should not be
    considered?
    A. The weighted average number of ordinary shares outstanding
    B. The amount of dividends declared on cumulative preference shares
    C. The amount of cash dividends declared on ordinary shares
    D. The number of ordinary shares resulting from the assumed conversion of bonds
    payable outstanding
    10. In determining diluted earnings per share, interest expense, net of income tax, on
    dilutive convertible bond payable should be
    A. Added back to weighted average shares outstanding for diluted earnings per
    share
    B. Added back to net income for diluted earnings per share
    C. Deducted form net income for diluted earnings per share
    D. Deducted from weighted average shares outstanding for diluted earnings per
    share

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