The Major Difference in the Statement of Retained Earnings Between

question 54

Multiple Choice

The major difference in the Statement of Retained Earnings between a service business and a merchandising business is:

• A)that the Retained Earnings statement of a service business includes Dividends.
• B)that the Retained Earnings statement of a merchandising business includes Dividends.
• C)that the Retained Earnings statement of a merchandising business shows the Cost of Goods Sold.
• D)nothing. There are no differences between the two.

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Definitions:

LIFO Inventory Cost Method

An inventory valuation method that assumes the last items placed in inventory are the first sold during an accounting period; stands for Last-In, First-Out.

Recent Costs

refer to the latest expenses incurred by a company, highlighting the most up-to-date financial outlays for operations or projects.

Current Revenues

Earnings generated from the normal operations of a company within a specific time period.

Lower-of-cost-or-market

An accounting principle that valuables inventory at the lower of its historical cost or the current market price, ensuring assets are not overstated.