An important fact to remember when analyzing the transactions of a company is that:
A) the income statement data appears under Common Stock.
B) the balance sheet data includes the ending balances of the asset, liabilities and revenues of the company.
C) dividends are added when computing the ending balance of retained earnings.
D) the income statement includes revenues and expenses.

Question

Quizplus · Accepted Answer

The income statement is where revenues and expenses are reported, making option D the correct choice. Option A is incorrect as income statement data does not appear under Common Stock. Option B is partially correct, but it should be noted that revenues do not belong on the balance sheet. Option C is incorrect as dividends are subtracted from retained earnings, not added.

An Important Fact to Remember When Analyzing the Transactions of a Company