When a Firm Has Securities Outstanding That, If Exchanged for Shares

Multiple Choice

When a firm has securities outstanding that, if exchanged for shares of common stock, would decrease basic earnings per share by _____ or more, generally accepted accounting principles require a dual presentation: basic earnings per share and diluted earnings per share.

A) 1 percent
B) 3 percent
C) 10 percent
D) 20 percent
E) 30 percent