QUESTION 14 e equation "Ending balance in retained earnings = Beginning balance in Cained earnings + Net operating income Dividends" highlights the nnection between the balance sheet and income statement and recognizes e fact that net operating income is essentially embedded within retained rnings on the balance sheet. Which of the following is true? - 1. Factory depreciation is recorded as a decrease in the Property, Plant, and Equipment column and as a decrease in the Retained Earnings column. 2. Factory utility costs paid in cash are recorded as a decrease in the Cash column and as an increase in the Manufacturing Overhead column. Only statement I is true. Only statement II is true. Both statements are true. Neither of the statements are true.
QUESTION 14 e equation "Ending balance in retained earnings = Beginning balance in Cained earnings + Net operating income Dividends" highlights the nnection between the balance sheet and income statement and recognizes e fact that net operating income is essentially embedded within retained rnings on the balance sheet. Which of the following is true? - 1. Factory depreciation is recorded as a decrease in the Property, Plant, and Equipment column and as a decrease in the Retained Earnings column. 2. Factory utility costs paid in cash are recorded as a decrease in the Cash column and as an increase in the Manufacturing Overhead column. Only statement I is true. Only statement II is true. Both statements are true. Neither of the statements are true.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Question 14?
Transcribed Image Text:QUESTION 14
= Beginning balance in
The equation "Ending balance in retained earnings
retained earnings + Net operating income Dividends" highlights the
connection between the balance sheet and income statement and recognizes
the fact that net operating income is essentially embedded within retained
earnings on the balance sheet. Which of the following is true?
-
1. Factory depreciation is recorded as a decrease in the Property, Plant, and
Equipment column and as a decrease in the Retained Earnings column.
2. Factory utility costs paid in cash are recorded as a decrease in the Cash
column and as an increase in the Manufacturing Overhead column.
Only statement I is true.
Only statement II is true.
Both statements are true.
Neither of the statements are true.
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The accounting equation states that assets equals to sum of liabilities and shareholders equity. The transactions can be recorded in horizontal form to analyze the effect of transactions on the accounting equation.
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