Question

If a company has noncumulative preferred stock, basic earnings per share is equal to net income less preferred dividends declared divided by the number of weighted average common shares outstanding.
a) true

b) false

Answer 1

Answer: True

Explanation:

Noncumulative preferred stock are the preferred stock shares that have dividends which start over every year.

It should be noted that fora company that has noncumulative preferred stock, the basic earnings per share will be equal to the net income less preferred dividends declared divided by the number of weighted average common shares outstanding.