How do we calculate the Retained Earnings balance on the Balance Sheet?
Which statement presents this?) Retained Earnings is the accumulated net income (revenues-expenses) less dividends over the life of the business. The statement of retained earnings presents the calculation. 4) What is the separate entity assumption? Economic Entity Concept- business is treated as an “entity” separate from its owners. 5) What is the historical cost principle? Historical cost describes the original cost of an asset at the time of purchase or payment as opposed to its market value. Historical cost principle dictates that most assets and liabilities should be recorded at their historical cost. 6) What is the Going Concern Assumption? “Going Concern” principle- business will survive for “foreseeable” future. 7) What accounts make up total stockholders equity? Contributed Capital and Retained Earnings. 8) What is Contributed Capital? What is Retained Earnings? Contributed Capital- the amount that stockholder’s invest in the business. Retained Earnings- represent the equity o
