Any Transaction That Affects the Income Statement Ultimately Affects the Balance

question 86

True/False

Any transaction that affects the income statement ultimately affects the balance sheet through the balance of retained earnings.

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Definitions:

Earnings Per Share

A metric for assessing a company's earnings, determined by dividing its net income by the total outstanding common stock shares.

Preferred Stock

A class of ownership in a corporation with a higher claim on assets and earnings than common stock, usually with fixed dividends.

Cumulative Preferred Stock

A type of preferred stock whose dividends accumulate if not paid in the agreed periods.

Par Value

The nominal or face value of a stock or bond as stated by the issuer, often used in the accounting of capital accounts.