Any transaction that affects the income statement ultimately affects the balance sheet through the balance of retained earnings.

Name: Any transaction that affects the income statement ultimately affects the balance sheet through the balance of retained earnings.
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Question

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Retained earnings is a component of stockholders' equity on the balance sheet, and any changes to the income statement directly impact the retained earnings balance, which in turn affects the overall balance sheet.

Any Transaction That Affects the Income Statement Ultimately Affects the Balance