Which Inference May Be Considered Incorrect Concerning the Statement of Retained

question 43

Multiple Choice

Which inference may be considered incorrect concerning the Statement of Retained Earnings?

• A)Retained earnings of $350,500 will appear on the balance sheet as of December 31,2013.
• B)The net income in the above statement came from the income statement for the year ending December 31,2013.
• C)Dividends are shown in parentheses because they are distributions made by a company to its stockholders as a return on their investment.
• D)Retained earnings represents the amount of cash at the end of 2013.

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Definitions:

Actual Costs

Expenditures that a company incurs, as opposed to estimations or budgeted amounts.

Standard Costs

Predetermined costs for material, labor, and overhead used as benchmarks for measuring performance.

Direct Labor Time Variance

The difference between the actual hours spent on production and the standard hours expected, multiplied by the standard hourly wage rate.

Actual Costs

are the genuine expenditures incurred in the production or acquisition of goods and services, as opposed to estimated or standard costs.