When computing diluted earnings per share, which of the following will be omitted from the calculation?
A)Dividends paid on common stock.
B)The weighted average common shares.
C)The effect of stock splits.
D)The number of common shares represented by stock purchase warrants.

Question

Quizplus · Accepted Answer

Dividends paid on common stock are not related to the computation of diluted earnings per share, therefore they are omitted from the calculation. The number of common shares represented by stock purchase warrants, as well as the effect of stock splits, are both considered in the calculation. The weighted average common shares are also used in the diluted earnings per share calculation, but are not omitted.

When Computing Diluted Earnings Per Share, Which of the Following