Indicate Whether Each of the Following Statements About Retained Earnings

question 135

Essay

Indicate whether each of the following statements about retained earnings is true or false.A dividend paid to stockholders decreases retained earnings.Issuing common stock for cash increases retained earnings.The amount of net income for a period must equal retained earnings.The purchase of a truck decreases retained earnings.The amount of net income for a period increases retained earnings.

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Definitions:

Sales-type Lease

A type of lease where the lessor recognizes immediate profit on the lease, similar to a sale, often used in equipment and vehicle financing.

Long-term Asset

A long-term asset is a resource owned by a company, providing economic benefits for a period extending beyond one year, including property, plant, and equipment.

Balance Sheet

A document that presents a snapshot of a corporation's financial health, by detailing assets, liabilities, and shareholders' equity on a specific date.

Direct Financing Leases

Leases where the lessor purchases an asset and leases it out, and the lease payments cover the purchase cost, plus a return on investment to the lessor.