1. How does the equity method distort earnings? (Points : 3)

a.Equity earnings are recorded when investment ownership is 100%. b.Equity earnings are recorded even if the investor cannot exercise influence over the investees policies. c.Income is recognized even though cash may never be received. d.Equity earnings are only recorded on a cash basis of accounting.

2.How is earnings per common share calculated? (Points : 3)

a.Operating profit divided by the average number of repurchased common stock shares. b. Operating profit divided by the average number of common stock shares outstanding. c. Net profit divided by the average number of common stock shares outstanding. d.Net profit divided by the average number of common and preferred stock shares outstanding.