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

4. Merchandising Operations

Net Sales

Financial Accounting

4. Merchandising Operations

Net Sales

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Multiple Choice

In the computation of basic earnings per share (EPS), a company will use the:

net sales divided by the total number of shares issued

net income before taxes divided by the number of preferred shares outstanding

net income available to common shareholders divided by the weighted-average number of common shares outstanding

gross profit divided by the weighted-average number of common shares outstanding

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Verified step by step guidance

Understand the concept of basic earnings per share (EPS). EPS is a financial metric used to measure the profitability of a company on a per-share basis, specifically for common shareholders.

Identify the formula for basic EPS: EPS = (Net Income Available to Common Shareholders) / (Weighted-Average Number of Common Shares Outstanding).

Clarify the components of the formula: Net Income Available to Common Shareholders is calculated by subtracting preferred dividends (if any) from the company's net income. The Weighted-Average Number of Common Shares Outstanding accounts for changes in the number of shares during the reporting period.

Ensure you have the necessary data: Obtain the net income, preferred dividends (if applicable), and the weighted-average number of common shares outstanding for the period in question.

Apply the formula: Substitute the values into the formula to compute the basic EPS. Remember, the result represents the earnings attributable to each common share for the reporting period.