With regard to relationships among financial statements, which of the following is true?
Posted: Sat Aug 07, 2021 7:10 am
A) The results of the statement of stockholders' equity affect the income statement.
B) The income statement affects the results of the statement of stockholders' equity.
C) The statement of cash flows affects the income statement.
D) The results of the statement of cash flows affect the statement of stockholders' equity.
Answer: B
Explanation: The statement of stockholders' equity explains changes in stockholders' equity
accounts, including the change in the retained earnings balance caused by net income.
B) The income statement affects the results of the statement of stockholders' equity.
C) The statement of cash flows affects the income statement.
D) The results of the statement of cash flows affect the statement of stockholders' equity.
Answer: B
Explanation: The statement of stockholders' equity explains changes in stockholders' equity
accounts, including the change in the retained earnings balance caused by net income.