Acompany has cumulative preferred stock. when computing earnings per share, the current year's dividends not declared on the preferred stock should be: a. deducted from earnings for the year. b. deducted, net of tax effect, from earnings for the year. c. added to earnings for the year. d. ignored.

A. Deducted from earnings for the year

Explanation:

The formula for Earnings Per Share= (Net Income- Preference Dividend)÷ Outstanding Common Shares

The implication of cumulative preferrred Stock is that dividends that have been missed in past financial years by the Cumulative prefrred stockholders maybe as a result of lack of profit  must be paid first before any current dividend can be paid.

The implication of the provision means, as long as the organisation bound to pay the dividends for the past periods cumulative preference stock, the current year's dividends not declared on the preferred stock based on the need to meet the demand for previous periods' payment will be deducted from the earnings for the year for EPS Calculation.

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answer; ///i believe the correct answer is(e) complementary to each other;