Transaction analysis and the accounting equation have been used to record several transactions for a company.The transactions are now recorded on a multi-column spreadsheet.When preparing an income statement with this spreadsheet,which column would be used?
A)Cash
B)Accounts Payable
C)Dividends
D)Retained Earnings

Question

Quizplus · Accepted Answer

When preparing an income statement, the retained earnings column would be used, as it reflects the company's earnings or losses from prior periods that are carried forward. The income statement calculates the net income or loss for the current period and then adds or subtracts those amounts from the retained earnings balance to arrive at the ending balance. The cash column represents cash inflows and outflows, the accounts payable column represents amounts owed to suppliers, and the dividends column represents distributions to shareholders, but none of these relate directly to the calculation of net income on the income statement.

Transaction Analysis and the Accounting Equation Have Been Used to Record