Which statement is true regarding the Income Statement?
A) Losses do not appear on income statements.
B) Dividends reduce net income.
C) Dividends declared increase net income.
D) Both losses and gains appear on an income statement.

Question

Quizplus · Accepted Answer

Both losses and gains appear on an income statement. The income statement shows the company's revenues and expenses over a specific period of time, which ultimately results in either a net income or a net loss. Both gains (revenues) and losses (expenses) are included in the calculation to determine the net income/loss for the period. Dividends declared and paid to shareholders are not included in the calculation of net income, but they do affect the company's equity and cash flow.

Which Statement Is True Regarding the Income Statement