Question

Indicate the financial statement on which each of the following items appears: income statement, statement of retained earnings, or balance sheet?

1) Income statement
2) Statement of retained earnings
3) Balance sheet

Answer 1

The income statement, statement of retained earnings, and balance sheet are three different financial statements that serve different purposes. The income statement reports a company's revenue and expenses, the statement of retained earnings shows changes in retained earnings, and the balance sheet provides a snapshot of a company's assets, liabilities, and shareholders' equity.

Step-by-step explanation:

1. Income statement: This financial statement shows a company's revenues, expenses, and net income for a specific period of time. It reports the profitability of the business by detailing the revenue earned and the expenses incurred in generating that revenue.
2. Statement of retained earnings: This financial statement shows changes in a company's retained earnings over a specific period of time. It reflects the amount of net income retained in the business after dividends are paid out.
3. Balance sheet: This financial statement reports a company's assets, liabilities, and shareholders' equity at a specific point in time. It provides a snapshot of a company's financial position, including what it owns (assets), what it owes (liabilities), and the owners' investment in the business (shareholders' equity).