Asked by Christina Williams on May 23, 2024
Verified
In preparing a statement of retained earnings, a company needs to know its
A) prior-period adjustments, net income (loss) , and dividends
B) comprehensive income and prior-period adjustments
C) comprehensive income, dividends, and prior-period adjustments
D) dividends and prior-period adjustments
Prior-Period Adjustments
Corrections of errors in previously issued financial statements for periods prior to the issuance of the current financial statements.
Net Income
The net income of a business, which is the amount remaining from total revenue after deducting all costs and taxes.
- Recognize prior period adjustments and their impact on financial statements.
- Calculate retained earnings adjustments and the impact of errors in previous financial statements.
Verified Answer
NT
Nguy?n Th? M? H?oMay 25, 2024
Final Answer :
A
Explanation :
A statement of retained earnings requires information about prior-period adjustments (corrections for accounting errors and other adjustments), net income (or loss) for the current year, and dividends paid out to shareholders. Comprehensive income, while an important financial metric, is not required for the preparation of a statement of retained earnings.
Learning Objectives
- Recognize prior period adjustments and their impact on financial statements.
- Calculate retained earnings adjustments and the impact of errors in previous financial statements.
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