Question

1. EPS (earnings per share) is not required to be reported in the income statement but is optional.

a. True

b. False

2. Companies report earnings per share for preferred stock, too.

a. true

b. False

3. Leases similar to installment purchases are capitalized.

1. True
2. False

Answer 1

Part 1)FALSE

EPS is required to be reported in the income statement for four major categories of income statement:-continued operations, discontinued operations, net income and extraordinary items.

Part 2) FALSE

EPS is calculated for ordinary shares only since preferred stock already earns fixed amount of preference dividends as income. While calculating EPS same is to be deducted and preferred stock is not taken in account.

Part 3) True

Leases similar to installment purchase are capitalized