Which of the following statements is correct?
Posted: Sat Aug 07, 2021 6:41 am
A) Assets on the balance sheet include retained earnings.
B) Retained earnings includes common stock.
C) The balance sheet equation states that assets equal liabilities.
D) A corporation's net income does not necessarily equal its net cash flow from operations.
Answer: D
Explanation: Revenue is recorded as it is earned, not necessarily when the cash from the sales is
collected. Expenses are recorded when incurred in generating revenue regardless of when cash is
expended.
B) Retained earnings includes common stock.
C) The balance sheet equation states that assets equal liabilities.
D) A corporation's net income does not necessarily equal its net cash flow from operations.
Answer: D
Explanation: Revenue is recorded as it is earned, not necessarily when the cash from the sales is
collected. Expenses are recorded when incurred in generating revenue regardless of when cash is
expended.