In calculating earnings per share, companies deduct preferred dividends from net income if:
A) they are noncumulative though not declared.
B) the dividends are declared.
C) they are convertible preferred shares.
D) they are callable preferred shares.

Question

Quizplus · Accepted Answer

Preferred dividends are deducted from net income in EPS calculation only if they are declared. If they are noncumulative and not declared or if they are convertible or callable preferred shares, they do not affect the EPS calculation.

In Calculating Earnings Per Share, Companies Deduct Preferred Dividends from Net