Dilutive Convertible Securities and Earnings Per Share Calculation

The correct answer is 'a. diluted not basic earnings per share.'

Dilutive convertible securities are securities that can be converted into common shares, potentially diluting earnings per share if converted. They are included in calculating diluted earnings per share to reflect this potential impact.

Basic earnings per share, however, excludes the effect of dilutive convertible securities. It considers only the number of outstanding common shares, not potential dilution from convertible securities.

Therefore, dilutive convertible securities are used in calculating diluted earnings per share, but not in calculating basic earnings per share.