Questions: Where must earnings per share be disclosed in the financial statements to satisfy generally accepted accounting principles? On the face of the balance sheet On the face of the income statement On the face of the statement of stockholders' equity In the footnotes to the financial statements

The answer is: On the face of the income statement.

Explanation for each option:

1. On the face of the balance sheet: This is incorrect. The balance sheet provides a snapshot of a company's financial position at a specific point in time, showing assets, liabilities, and equity. Earnings per share (EPS) is not disclosed on the balance sheet because it is a measure of profitability, not financial position.

2. On the face of the income statement: This is correct. According to generally accepted accounting principles (GAAP), earnings per share must be disclosed on the face of the income statement. The income statement provides information about a company's financial performance over a period of time, including revenues, expenses, and net income. EPS is a key indicator of a company's profitability and is typically presented at the bottom of the income statement.

3. On the face of the statement of stockholders' equity: This is incorrect. The statement of stockholders' equity shows changes in the equity section of the balance sheet over a period of time, including items like retained earnings, dividends, and stock issuances. EPS is not disclosed here because it relates to profitability, not changes in equity.

4. In the footnotes to the financial statements: This is incorrect. While additional details about EPS calculations and assumptions may be provided in the footnotes, the primary disclosure of EPS is required on the face of the income statement. The footnotes serve to provide supplementary information and explanations, but they do not replace the requirement to present EPS on the income statement itself.