Which one of these statements is correct?
A)Pretax income is equal to net income minus taxes.
B)The addition to retained earnings is equal to net income plus dividends.
C)Operating income is equal to operating revenue minus cost of goods sold.
D)Only current taxes are included in the tax expense.
E)Earnings per share can be negative but dividends per share cannot.

Question

Quizplus · Accepted Answer

Earnings per share (EPS) can indeed be negative if a company reports a loss, as EPS is calculated based on net income. Dividends per share, however, represent a distribution of profits to shareholders and cannot be negative; a company cannot distribute losses to shareholders.

Which One of These Statements Is Correct