Preferred dividends would not be subtracted from earnings when computing earnings per share in a year when the dividends are not declared if the preferred stock is:
A)Noncumulative.
B)Convertible.
C)Participating.
D)Cumulative.

Question

Quizplus · Accepted Answer

Noncumulative preferred stock does not accumulate unpaid dividends, meaning that if a dividend is not declared in a given year, it does not carry over into future years. Therefore, preferred dividends would not be subtracted from earnings when computing earnings per share in a year when the dividends are not declared for noncumulative preferred stock.

Preferred Dividends Would Not Be Subtracted from Earnings When Computing