EARNINGS PER SHARE

MULTIPLE CHOICE QUESTIONS (THEORIES)

1. Consider the following statements

Statement I: An entity shall present on the face of the income statement basic and diluted earnings
per share for income from continuing operations
Statement II: An entity that reports a discontinued operations is not required to disclose the basic
and diluted earnings per share for the discontinued operations either on the face of the income
statement or in the notes

Which of the following statements is incorrect in relation to presentation of earnings per share?
A. Statement I only
B. Statement II only
C. Both Statements I and II
D. Neither Statements I and II

2. In computing basic earnings per share, the amount of preference dividends or noncumulative
preference shares shall be?
A. Deducted from net income wheter declared or not
B. Deducted from net income only when declared
C. Added only to the Net Income only when declared
D. Ignored

3. In computing basic earnings per share, the full amount of the required preference dividends on
cumulative preference shares for the period shall be:
A. Deducted from net income wheter declared or not
B. Deducted from net income only when declared
C. Added only to the Net Income only when declared
D. Ignored
4. Earnings per share disclosures are required only for
A. Entities with complex capital structure
B. Entities that change their capital structure during the reported period
C. Public entities
D. Private entities

5. Earnings per share shall be computed on the basis of

A. Ordinary shares outstanding at the end of the year
B. Ordinary shares outstanding at the beginning of the year
C. Ordinary shares outstanding at the middle of the year
D. Average ordinary shares outstanding during the year