The Major Types of Transactions That Affect Retained Earnings Are

question 7

Multiple Choice

The major types of transactions that affect retained earnings are:

• A)paid-in capital and common stock.
• B)assets and liabilities.
• C)revenues,expenses,and dividends.
• D)revenues and liabilities.

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Definitions:

Overstate Expenses

To overstate expenses means to report higher expenses than were actually incurred, which can lead to an understatement of net income in financial reporting.

Understate Assets

The incorrect reporting of asset values on the balance sheet, making them appear lower than their actual worth.

Total Assets

The sum of all resources owned by a company, valued in financial terms, and listed on the balance sheet.

Total Expenses

The sum of all costs and expenses incurred by a business or individual in a specific period.