Answer the following statements true (T) or false (F)

1. Cash dividends and stock splits decrease the Retained Earnings account.
2. Small stock dividends increase the Paid-In Capital in Excess of Par account.
3. A corporation's income statement includes some unique items that do not often apply to smaller
businesses.
4. A corporation's income statement includes some unique items that do not often apply to smaller
businesses. These items include gross profit and income from continuing operations.
5. Special items and earnings per share are reported on the income statement after income from
continuing operations.


1. FALSE - Explanation: Stock splits have no effect on Retained Earnings.
2. TRUE
3. TRUE
4. FALSE
5. TRUE

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