When Preparing the Retained Earnings Statement, the Beginning Retained Earnings

question 37

Multiple Choice

When preparing the retained earnings statement, the beginning retained earnings balance can always be found

• A) in the Income Statement columns of the work sheet
• B) in the statement of cash flows
• C) in the general ledger
• D) in the Adjustments columns of the work sheet

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Definitions:

Patent

A legal document granted by the government giving an inventor exclusive rights to make, use, or sell an invention for a specified period of time.

Cash Flows

The total sum of cash and cash-equivalent assets moving in and out of a company.

Income Tax Payable

The amount of income tax a company owes to the government but has not yet paid.

Direct Method

A way to prepare the cash flow statement, where operating cash receipts and payments are listed directly to calculate net cash from operating activities.