Earnings per share (basic) is calculated as:

A Net income / total shares

B (Net income − preferred dividends) / weighted average common shares outstanding

C Revenue / shares

D Assets / shares

✓ Correct Answer: Option B

Basic EPS = (Net Income − Preferred Dividends) / Weighted Average Common Shares Outstanding.

💡 Why is B) the correct answer?

The correct answer to the question "Earnings per share (basic) is calculated as:" is Option B: (Net income − preferred dividends) / weighted average common shares outstanding.

The other options — A) Net income / total shares, C) Revenue / shares, D) Assets / shares — are incorrect for this CPA Exam Prep question. As explained above: Basic EPS = (Net Income − Preferred Dividends) / Weighted Average Common Shares Outstanding.

📚 About This CPA Exam Prep Practice Question

This 1-level CPA Exam Prep question from the Financial Accounting (FAR) topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free CPA Exam Prep practice test or use flashcards for spaced repetition review.

Practice CPA Exam Prep Quizzes → Browse All Questions Study Flashcards

Earnings per share (basic) is calculated as:

✓ Correct Answer: Option B

📚 About This CPA Exam Prep Practice Question

Related CPA Exam Prep Questions