Preparing the Basic Income Statement and Statement of Retained Earnings


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Why is it necessary to complete the basic income statement prior to completing the statement of retained earnings?

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1. Which financial statement tells whether a company made or lost money in a given time period?

2. A company had total revenue of $20,000 for the month ending March 31. In the same time period, the company had $12,000 in expenses. What was the company's net income or net loss?

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About This Quiz & Worksheet

The quiz will test you on definitions of financial statements. You will be given a definition of a term. You will then need to select the correct term from the provided choices. Other questions will give you financial scenarios and you will need to identify the net income or loss.

Quiz & Worksheet Goals

The quiz covers the following:

  • Four types of financial statements
  • Statement that tells whether a company made/lost money
  • Standard that guides the creation of the financial statements

Skills Practiced

The quiz helps you practice the following skills:

  • Making connections - use understanding of the concept of financial statements
  • Interpreting information - verify that you can read information regarding financial statements and interpret it correctly
  • Defining key concepts - ensure that you can accurately define main phrases, such as basic income statements and statements of cash flows

Additional Learning

Finish the quiz and head over to the related lesson, Preparing the Basic Income Statement and Statement of Retained Earnings. This lesson covers the following objectives:

  • Defining financial statements
  • Exploring the GAAP guidelines
  • Describing an income statement
  • Understanding the retained earnings statement
  • Explaining the components of the income statement and the retained earnings statement