Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

14. Financial Statement Analysis

Ratios: Earnings Per Share (EPS)

Financial Accounting

14. Financial Statement Analysis

Ratios: Earnings Per Share (EPS)

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Multiple Choice

Under U.S. GAAP, computations for earnings per share (EPS) for interim reports are based on which of the following?

The previous year's interim period results

The projected annual earnings for the entire fiscal year

Only the results of the current interim period

The year-to-date period, not just the current interim period

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Verified step by step guidance

Understand the concept of Earnings Per Share (EPS): EPS is a financial metric used to measure the profitability of a company on a per-share basis. It is calculated by dividing net income by the weighted average number of common shares outstanding during the period.

Recognize the specific requirement under U.S. GAAP for interim reporting: U.S. GAAP requires that EPS for interim reports be computed based on the year-to-date results, not just the results of the current interim period.

Clarify why year-to-date results are used: Using year-to-date results ensures consistency and comparability across reporting periods, as it reflects the cumulative performance of the company up to the reporting date.

Understand the difference between interim and annual reporting: Interim reports provide financial information for a portion of the fiscal year (e.g., quarterly), while annual reports cover the entire fiscal year. EPS for interim reports must align with the year-to-date performance to provide a more accurate representation of earnings.

Apply this knowledge to the problem: The correct answer is 'The year-to-date period, not just the current interim period,' because U.S. GAAP emphasizes the cumulative results for EPS calculations in interim reporting.