{"id":214426,"date":"2025-05-14T10:15:49","date_gmt":"2025-05-14T10:15:49","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=214426"},"modified":"2025-05-14T10:15:53","modified_gmt":"2025-05-14T10:15:53","slug":"select-the-financial-statement-to-which-the-item-belongs","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/05\/14\/select-the-financial-statement-to-which-the-item-belongs\/","title":{"rendered":"Select the financial statement to which the item belongs."},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">Select the financial statement to which the item belongs. Items a. The change in retained earnings due to fet income and dividends. b. Amount of cash received from borrowing money from a local bank. c. Revenue from sales to customers during the year. d. Gains from foreign currency translations. e. Total amounts owed to workers at the end of the year. Financial Statements<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-ast-global-color-0-color\">The Correct Answer and Explanation is:<\/mark><\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">To correctly identify the financial statements to which each item belongs, we must understand the purpose of each of the <strong>four main financial statements<\/strong>:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Income Statement (IS)<\/strong> \u2013 Shows a company\u2019s revenues and expenses over a period of time, leading to net income or loss.<\/li>\n\n\n\n<li><strong>Statement of Retained Earnings (or Statement of Changes in Equity)<\/strong> \u2013 Shows changes in retained earnings from net income and dividends over a period.<\/li>\n\n\n\n<li><strong>Balance Sheet (BS)<\/strong> \u2013 Shows a snapshot of a company\u2019s assets, liabilities, and equity at a specific point in time.<\/li>\n\n\n\n<li><strong>Statement of Cash Flows (SCF)<\/strong> \u2013 Shows how cash is generated and used in operating, investing, and financing activities over a period.<\/li>\n<\/ol>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\">Matching Items with Financial Statements:<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>a. The change in retained earnings due to net income and dividends.<\/strong><br><strong>Answer: Statement of Retained Earnings<\/strong><br>This statement summarizes how retained earnings have changed due to net income and dividends. Net income increases retained earnings, while dividends decrease it. It links the income statement and balance sheet.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>b. Amount of cash received from borrowing money from a local bank.<\/strong><br><strong>Answer: Statement of Cash Flows<\/strong><br>This is a financing activity. Borrowing money is a cash inflow and is recorded in the financing section of the Statement of Cash Flows.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>c. Revenue from sales to customers during the year.<\/strong><br><strong>Answer: Income Statement<\/strong><br>Revenue represents the earnings from primary business activities. It is the first line on the income statement and crucial in calculating net income.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>d. Gains from foreign currency translations.<\/strong><br><strong>Answer: Statement of Comprehensive Income<\/strong> <em>(or included in Equity section if OCI is not separate)<\/em><br>These gains are often classified under <strong>Other Comprehensive Income (OCI)<\/strong>, which extends beyond the income statement. If the company presents a combined statement, it appears in the Statement of Comprehensive Income.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>e. Total amounts owed to workers at the end of the year.<\/strong><br><strong>Answer: Balance Sheet<\/strong><br>These amounts are liabilities\u2014typically under \u201csalaries payable\u201d or \u201caccrued expenses\u201d\u2014and are shown in the current liabilities section of the balance sheet.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\">Summary Table:<\/h3>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><thead><tr><th>Item<\/th><th>Financial Statement<\/th><\/tr><\/thead><tbody><tr><td>a.<\/td><td>Statement of Retained Earnings<\/td><\/tr><tr><td>b.<\/td><td>Statement of Cash Flows<\/td><\/tr><tr><td>c.<\/td><td>Income Statement<\/td><\/tr><tr><td>d.<\/td><td>Statement of Comprehensive Income<\/td><\/tr><tr><td>e.<\/td><td>Balance Sheet<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">Understanding these categories is crucial for analyzing a company\u2019s financial health and operations.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Select the financial statement to which the item belongs. Items a. The change in retained earnings due to fet income and dividends. b. Amount of cash received from borrowing money from a local bank. c. Revenue from sales to customers during the year. d. Gains from foreign currency translations. e. Total amounts owed to workers [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-214426","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/214426","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=214426"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/214426\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=214426"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=214426"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=214426"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}