When Preparing the Financial Statements

question 76

Multiple Choice

When preparing the financial statements:

• A) the balance sheet lists the balance of the asset accounts at the end of the period.
• B) retained earnings is included in common stock.
• C) data for the statement of cash flows can be found under the retained earnings account.
• D) data for the income statement is found under the Cash account.

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Definitions:

Market System

A system of economics where individual citizens and businesses within a country solely determine economic choices and the cost of goods and services through their collective interactions.

Profit and Loss System

A financial statement that shows the revenue, costs, and expenses incurred during a specific period of time.

Business Risk

The possibility of experiencing financial loss or failure inherent in operating a business.

Market System

A market system is an economic system in which decisions regarding investment, production, and distribution are based on supply and demand.