Question

Which of the following describes the information reported in the income statement?

a.Net income for the period is calculated by subtracting expenses from revenues.
b.Total assets equal total liabilities plus stockholders' equity.
c.Changes in stockholders' equity are shown through changes in common stock and retained earnings.
d.All accounts and account balances are shown.

Answer 1

The information reported in the income statement includes net income, the balance sheet equation, changes in stockholders' equity, and all accounts and their balances.

Step-by-step explanation:

The information reported in the income statement is described as follows:

1. Net income for the period is calculated by subtracting expenses from revenues. The income statement shows the financial performance of a company over a specific period of time, and the net income represents the profit or loss the company has generated.
2. Total assets equal total liabilities plus stockholders' equity. This equation is known as the balance sheet equation and represents the fundamental accounting equation that must always hold true.
3. Changes in stockholders' equity are shown through changes in common stock and retained earnings. Stockholders' equity represents the owners' claims on the company's assets, and changes in stockholders' equity reflect the investments made by shareholders and the company's profits or losses.
4. All accounts and account balances are shown on the income statement. The income statement presents various accounts and their respective balances such as revenues, expenses, and net income.