## Knowledge Check 01### Topic: Disclosures Related to Earnings Per Share (EPS)**Which of the following statements about disclosures relating to EPS are true? (Select all that apply.)**- [ ] A reconciliation is required of the numerator and denominator used in the basic EPS computations to the numerator and the denominator used in the diluted EPS computations.- [ ] Any adjustments to the numerator for preferred dividends must be disclosed.- [ ] Any potential common shares that weren't included because they were dilutive must be disclosed.- [ ] Any transactions that occurred before the end of the most recent period that would materially affect earnings per share must be disclosed.### Instruction: Check all that applyUse this knowledge check to assess your understanding of the disclosure requirements related to EPS calculations. Consider each statement and determine which disclosures are necessary according to accounting standards.

Earnings per share (EPS) is calculated by dividing a company's net profit by the number of outstanding common shares. Investors will pay more for company's shares if they believe the company's earnings are higher than its share price, therefore a higher EPS signals more value.Explanation The following disclosure is required by the accounting standard. a)The weighted average number of ordinary shares utilised as the denominator in basic and diluted EPS calculations, as well as a reconciliation of these denominators. b) Instruments that might dilute basic EPS in the future but were not factored into the diluted EPS computation. c) transactions that happened after the balance sheet date but would have materially affected the number of ordinary shares or prospective ordinary shares outstanding at the end of the period if they had occurred before the reporting period's end. Correct option is (c) Any potential Common shares that weren’t included because they were dilutive must be disclosed.Hence, Any potential Common shares that weren’t included because they were dilutive must be disclosed. Statement about disclosures relating to EPS is true.