The link between the balance sheet and the income statement is the ________.
A)statement of cash flows
B)schedule of cost of goods sold
C)statement of changes in retained earnings
D)schedule of outstanding accounts receivable

Question

Quizplus · Accepted Answer

The statement of changes in retained earnings shows how the net income from the income statement is added to the retained earnings on the balance sheet. This link allows investors and analysts to better understand how a company's profits are being utilized and how it affects the company's financial health. Choices A, B, and D are not direct links between the balance sheet and income statement.

The Link Between the Balance Sheet and the Income Statement