Accounting: Tools for Business Decision Making, 5th Edition

Published by Wiley
ISBN 10: 1118128168
ISBN 13: 978-1-11812-816-9

Chapter 1 - Introduction to Financial Statements - Questions - Page 27: 17


a) Both include net income. b) Both show stockholders' equity. c) Both show the value of cash accounts.

Work Step by Step

a) The income statement shows net income for a given period. Net income is shown on the retained earnings statement because it increases retained earnings. b) The retained earnings shows the current retained earnings balance. Retained earnings is a type of equity that is shown on the balance sheet. c) The balance sheet lists all the assets of a company. The cash balance shown on the cash flow statement is a type of asset.
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