Multiple Choice
Which of the following items is NOT included in stockholders' equity on the balance sheet?
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1. Introduction to Accounting
The Financial Statements
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Which of the following terms is commonly used to describe an income statement?
A
Statement of Retained Earnings
B
Statement of Earnings
C
Statement of Financial Position
D
Statement of Cash Flows
Verified step by step guidance1
Understand the purpose of an income statement: It is a financial report that shows a company's revenues, expenses, and profits over a specific period of time.
Recognize the alternative names for an income statement: It is often referred to as the 'Statement of Earnings' because it summarizes the earnings (net income) of a company.
Differentiate the other terms provided: 'Statement of Retained Earnings' focuses on changes in retained earnings, 'Statement of Financial Position' is another name for the balance sheet, and 'Statement of Cash Flows' details cash inflows and outflows.
Identify the correct term: Based on the description and purpose of the income statement, the term 'Statement of Earnings' is commonly used to describe it.
Conclude that understanding the context and purpose of financial statements is essential for correctly identifying their alternative names.
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