When dealing with financial projections, which of the following generally links the income statement to the balance sheet?

Question

Quizplus · Accepted Answer

Equity represents the residual interest in the assets of a company after liabilities are paid off. Net income increases equity, which is one of the components of the balance sheet. Therefore, linking the income statement to the balance sheet is done by increasing equity by the amount of net income. None of the other options provided establish a direct link between the income statement and the balance sheet.

When Dealing with Financial Projections, Which of the Following Generally