What item flows from the statement of retained earnings to the balance sheet?
A.
Dividends
B.
Retained earnings
C.
Net income
D.
Cash
Answer is option B - Retained earnings.
Retained earnings (ending balance) after all adjustments for the year flows to the balance sheet.
Dividends and Net income flows to the Statement of retained earnings as closing entries. These are adjustments to the retained earnings statement and it does not flow to the balance sheet.
Cash is an asset and not related to retained earnings. Hence, can not flow to balance sheet from Statement of retained earnings.
Conclusion: Option B is correct as the ending balance of retained earnings flows to the balance sheet and items mentioned in other options do not.
What item flows from the statement of retained earnings to the balance sheet? A. Dividends B....
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