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

On which two financial statements does the Retained Earnings account appear?

Statement of Stockholders' Equity and Statement of Cash Flows

Statement of Cash Flows and Income Statement

Income Statement and Balance Sheet

Balance Sheet and Statement of Stockholders' Equity

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Verified step by step guidance

Understand the concept of Retained Earnings: Retained Earnings represent the cumulative amount of net income that a company has retained, rather than distributed as dividends to shareholders. It is an important component of equity.

Identify the financial statements where Retained Earnings are reported: Retained Earnings appear on the Balance Sheet as part of Stockholders' Equity and on the Statement of Stockholders' Equity, which details changes in equity accounts over a period.

Clarify why Retained Earnings do not appear on the Income Statement: The Income Statement reports revenues, expenses, and net income for a specific period, but it does not include Retained Earnings directly. Retained Earnings are derived from net income but are reported separately.

Explain why Retained Earnings do not appear on the Statement of Cash Flows: The Statement of Cash Flows focuses on cash inflows and outflows from operating, investing, and financing activities. While dividends (which reduce Retained Earnings) may be shown, the Retained Earnings account itself is not reported here.

Conclude that the correct answer is Balance Sheet and Statement of Stockholders' Equity, as these are the two financial statements where Retained Earnings are explicitly presented.