The _____ are linked (that is, they articulate) through the shareholders' equity account, Retained Earnings.
A)balance sheet and the income statement
B)balance sheet and the statement of cash flows
C)statement of cash flows and the income statement
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

The balance sheet and the income statement are linked through Retained Earnings, which is a component of shareholders' equity. Net income from the income statement is added to Retained Earnings on the balance sheet, while dividends paid are subtracted from Retained Earnings on the balance sheet. Therefore, (A) is the correct choice. The other options, (B) and (C), are not linked through Retained Earnings.

The _____ Are Linked (That Is, They Articulate) Through the Shareholders