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With regard to relationships among financial statements, which of the following is true? The results of...

With regard to relationships among financial statements, which of the following is true?

The results of the statement of stockholders' equity affect the income statement.

The income statement affects the results of the statement of stockholders' equity.

The statement of cash flows affects the income statement.

The results of the statement of cash flows affect the statement of stockholders' equity.

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Answer #1

Answer :- The below Statement is True :-

The income statement affects the results of the statement of stockholders' equity.

Explanation :- Statement of Stockholder's Equity includes Changes in Equity value of a company and Retained Earnings & Retained Earnings includes Net Income minus Dividend paid . Therefore , Statment of Stockholder's Equity is Effected by the amount of Net Income and Dividend Paid . Hence , The income statement affects the results of the statement of stockholders' equity.

Also , Statement of Cash Flows is prepared from Income Statements and Statement of stockholders' equity , therefore the results of statement of cash flows do not affect the statement of stockholders' equity and Income statement.

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