1. Which of the following is true?

1. Basic eps equals net income minus dividends declared for noncumulative preferred stock divided by the weighted average number of common shares outstanding.
2. The numerator for basic eps equals net income plus any preferred dividends declared or not for cumulative preferred stock.
3. The denominator for basic eps equals the number of shares outstanding at the end of the period regardless of the activity of common stock during the period.
4. Under the treasury stock method, stock options will always result in diluted eps being higher than basic eps.