Which of the following correctly identifies one of the links among the four financial statements?
A)Net income from the income statement goes directly to the balance sheet.
B)Net income from the income statement goes to the statement of changes in equity.
C)Other comprehensive income goes to the statement of cash flows.
D)Retained earnings from the balance sheet goes to the income statement.

Question

Quizplus · Accepted Answer

Net income from the income statement is carried forward to the statement of changes in equity as it affects the total equity of the company. Other comprehensive income from the income statement is also carried forward to the statement of changes in equity. Retained earnings from the statement of changes in equity are reported on the balance sheet. Therefore, option B is the correct link between two financial statements.

Which of the Following Correctly Identifies One of the Links