Question

In computations of weighted average of shares outstanding, when a stock dividend or stock split occurs, the additional shares are
1. weighted by the number of days outstanding.
2. considered outstanding at the beginning of the year.
3. weighted by the number of months outstanding.
4. considered outstanding at the beginning of the earliest year reported.

Answer 1

Answer:

The correct option is 4

Explanation:

Weighted average shares outstanding, is the term which is described as the number of company shares evaluated after the adjustment for the variations in the share capital through the reporting year.

The shares of the company which are outstanding will not be constant and might change or vary through various times through the period.

While computing the weighted average of the shares outstanding, when the stock dividend happen, the extra shares are taken as outstanding at the starting of the earliest period.