In computing the earnings per share of common stock,noncumulative preferred dividends not declared should be
A) deducted from the net income for the year,net of tax.
B) added to the net income for the year.
C) deducted from the net income for the year.
D) ignored.

Question

Quizplus · Accepted Answer

Noncumulative preferred dividends not declared are not considered a liability as they do not accumulate over time. Therefore, they are not deducted or added to the net income for the year. They are simply ignored in the computation of earnings per share of common stock.

In Computing the Earnings Per Share of Common Stock,noncumulative Preferred