Describe the relationship between the balance sheet and the income statement
RELATIONSHIP BETWEEN THE BALANCE SHEET AND THE INCOME STATEMENT
The income statement links the beginning and ending balance sheets. The beginning balance of the shareholders' equity account Retained Earnings plus net income from the income statement less dividends equals the ending balance of Retained Earnings. The equation that describes the relationship between the balance sheet and the income statement through the Retained Earnings account is as follows:
Retained Earnings (beginning) + Net Income - Dividends = Retained Earnings (ending)
Common terminology often says that the income statement "articulates" with the balance sheet. Retained earnings measures the cumulative excess of net income over dividends for the life of a firm. Cumulative means that retained earnings aggregates all undistributed earnings.
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The maximum base for the social security tax is the same as that for the Medicare tax.
Answer the following statement true (T) or false (F)
How are profits and losses shared in the absence of a limited partnership agreement?
A) Profits and losses are shared equally among all partners. B) Profits and losses are shared equally among general partners and unequally among limited partners. C) Profits are shared equally among all partners, losses are shared based on the value of each partner's capital contribution. D) Both profits and losses are shared on the basis of the value of each partner's capital contribution.
Which sentence effectively uses words that are familiar to businesspeople?
A) Please ascertain whether the deliverance of merchandise will be forthcoming in the duration of the business cycle. B) He was not cognizant of the actuality that he was still in a probationary period. C) A financial deficit may be encountered during the transitional period following the merger. D) The board of directors will soon meet to discuss acquiring the Sonar Company. E) The accountant will commence to compute the amount of monetary funds that should be allocated for remunerations.
Indicate how each event affects the elements of the financial statements. Use the following letters to record your answer in the box shown below each element. Use only one letter for each element. You do not need to enter amounts.Increase = IDecrease = DNo Effect = NA(Note that "No Effect" means that the event does not affect that element of the financial statements or that the event causes an increase in that element and is offset by a decrease in that same element.) On December 31, Year 1, Kirkland Co. paid cash and recognized interest expense on bonds that it had issued at 101.5 on January 1, Year 1. The company uses the straight-line method to amortize bond discounts and premiums. AssetsLiabilitiesStk. EquityRevenuesExpensesNetStmt. of ?IncomeCash Flows???????
What will be an ideal response?