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The Retained Earnings Account Is the Link Between the Balance

question 71

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The retained earnings account is the link between the balance sheet and the statement of cash flows.


Definitions:

Average Costing

A method of inventory valuation where the cost of goods sold and ending inventory values are determined by averaging the cost of all similar items in the inventory.

Treasury Stock

Shares that were issued and subsequently reacquired by the issuing company, reducing the number of outstanding shares.

Earnings Per Share

Earnings Per Share (EPS) is a measure of a company's profitability, calculated as net income divided by the number of outstanding shares.

Legal Capital

The portion of a company's capital, represented by the par value of its issued shares, that cannot legally be distributed to shareholders as dividends.

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