Question

All of the following are interrelationships that are important to understand when preparing financial statements except...

All of the following are interrelationships that are important to understand when preparing financial statements except

Select one:

a. the net income from the income statement is used in the retained earnings statement.

b. the ending retained earnings from the retained earnings statement is used in the stockholder's equity section of the balance sheet.

c. the cash on the balance sheet should be equal to the cash at the end of the period on the statement of cash flows.

d. all of the payments on the balance sheet should be equal to the cash payments for operating activities on the statement of cash flows.

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Answer #1
All of the payments on the balance sheet should be equal to the cash payments for operating activities on the statement of cash flows is not correct
Balance sheet does not show cash payments. Balance sheet shows the balances of permanent accounts as of a specific date.
Net income from the income statement is used in the calculation of ending retained earnings in retained earnings statement.
The ending retained earnings balance is used in the balance sheet.
The cash balance on the balance sheet equals the cash reported at the end of the period on the statement of cash flows.
Option D should be selected
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