How does diluted earnings per share differ from basic earnings per share? (This is from the textbook material.)
A. Diluted earnings per share is always larger than basic earnings per share.
B. Diluted earnings per share considers the effect on earnings per share if convertible securities were converted into common stock.
C. Diluted earnings per share uses actual common stock outstanding at the end of year while basic earnings per share uses the average number of shares outstanding throughout the year.
D. Diluted earnings per share uses operating profit in the numerator while basic earnings per share uses net profit.