Which of the following is true about the relationships between the financial statements?

Question

Quizplus · Accepted Answer

The ending balances of the retained earnings found in the Statement of Changes in Stockholders' Equity are reported on the Balance Sheet as a component of the total equity.

Answer: B
 The net income reported on the Income Statement is incorporated into the Balance Sheet as part of the retained earnings, and it is not presented as a separate line item.

Answer: D
 The cash figures shown on the Income Statement represent the total cash generated or used by the business during the reporting period, whereas the Statement of Cash Flows provides a detailed account of the inflows and outflows of cash during that period. Therefore, the cash figures reported on the Income Statement are not reported on the Statement of Cash Flows to avoid duplicating information.

Option C is incorrect as the cash inflows identified on the Statement of Cash Flows represent the cash transactions for the period, and they may or may not be associated with the revenue and expense items reported on the Income Statement.

Which of the Following Is True About the Relationships Between