Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

12. Stockholders' Equity

Retained Earnings

Financial Accounting

12. Stockholders' Equity

Retained Earnings

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Multiple Choice

Which of the following appears on both the income statement and the statement of retained earnings?

Net income

Dividends

Total assets

Common stock

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Understand the purpose of the income statement: The income statement reports a company's financial performance over a specific period, including revenues, expenses, and net income. Net income is the final result of the income statement and represents the company's profit or loss for the period.

Understand the purpose of the statement of retained earnings: The statement of retained earnings shows changes in retained earnings over a period, starting with the beginning balance, adding net income, and subtracting dividends. It connects the income statement to the balance sheet.

Identify the connection between the two statements: Net income from the income statement is carried over to the statement of retained earnings as it impacts the retained earnings balance. This is why net income appears on both statements.

Clarify why other options do not appear on both statements: Dividends are only shown on the statement of retained earnings as a deduction from retained earnings. Total assets and common stock are balance sheet items and do not appear on either the income statement or the statement of retained earnings.

Conclude that net income is the correct answer because it is the only item that appears on both the income statement and the statement of retained earnings.