Question

In computing the weighted-average number of shares outstanding during the year, which of the followingmidyear events must be treated as if it had occurred at the beginning of the year?a. Declaration and distribution of stock dividend.b. Purchase of treasury stock.c. Sale of additional common stock.d. Sale of preferred convertible stock.

Answer 1

Answer: Option A

Step-by-step explanation: While calculating weighted average number of shares the declaration of stock dividend should be treated like it happened at the beginning of the year and the calculation should be done accordingly.

Weighted average number of shares can be defined as the number of shares of a company that have been outstanding in the market throughout the year and stock dividend is distributed to the existing shareholders on the basis of their current holding.

Thus, from the above we can conclude that option A is correct.