Question

The Owner's Capital balance that appears on the classified balance sheet is transferred from the ending balance on the income statement.

A. True
B. False

Answer 1

The statement is b) false; the Owner's Capital balance on the balance sheet is influenced by the net income from the income statement but is not directly transferred from it.

Step-by-step explanation:

The statement that the Owner's Capital balance on the classified balance sheet is transferred from the ending balance on the income statement is false.

Owner's Capital is part of the equity section of the balance sheet and represents the owner's interest in the company. The balance sheet reports a company's assets, liabilities, and equity at a specific point in time.

While the income statement reports a company's revenues and expenses over a period of time. The ending balance of Owner's Capital is affected by the net income or loss of the company.

Which is transferred from the income statement to the Owner's Equity section, but it is not simply a transfer of the ending balance from the income statement.