1. In determining diluted earnings per share, undeclared annual dividends on convertible cumulative preferred stock should: A) Result in no net effect on the numerator, B) Be added back to net income in the numerator whether declared or not. C) Be deducted from net income in the numerator only if declared. D) Be deducted from net income in the numerator whether declared or not. 2. Which of the following statements is accurate regarding the process of applying the treasury stock method in computing diluted EPS? A) Cash received upon an assumed exercise of stock options is used to purchase stock for the treasury at the end of year market price. B) Incremental shares (assumed Issued shares over purchased shares) are subtracted from the denominator of the diluted EPS calculation. C) Stock options are not assumed to be exercised when the average market price is less than or equal to the exercise price. D) If restricted stock is issued, the amount of unearned compensation on a reporting date is added to the numerator of the diluted EPS calculation