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

1. Introduction to Accounting

The Financial Statements

Financial Accounting

1. Introduction to Accounting

The Financial Statements

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Multiple Choice

Which item is transferred from the income statement to the statement of retained earnings?

Dividends declared

Cash balance

Total assets

Net income

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Understand the relationship between the income statement and the statement of retained earnings. The income statement reports a company's financial performance over a period, including revenues, expenses, and net income. The statement of retained earnings shows how net income and dividends affect the retained earnings balance.

Identify the key item that connects the two statements. Net income, calculated on the income statement, is transferred to the statement of retained earnings as it contributes to the change in retained earnings.

Exclude the other options provided in the problem. Dividends declared are subtracted from retained earnings but are not derived from the income statement. Cash balance and total assets are part of the balance sheet, not directly related to the income statement or retained earnings.

Recognize that net income is the correct item because it represents the profit earned during the period, which increases retained earnings when transferred.

Conclude that the transfer of net income from the income statement to the statement of retained earnings is a critical step in understanding how financial statements are interconnected.