110 free test bank for financial and managerial accounting 3rd edition Đề thi trắc nghiệm có đáp án

110 Free Test Bank for Financial and Managerial
Accounting 3rd Edition
by Horngren
Multiple Choice Questions
Which of the following are MOST likely to be users of managerial
accounting information?
1.

A. Potential investors

2.

B. Creditors

3.

C. Customers

4.

D. Company managers.

A corporation possesses all but one of the following
characteristics. Which of the following is NOT a characteristic of a
corporation?
1.

A. If a corporation cannot pay its debts, lenders can take the owners'
personal assets to satisfy the obligations.

2.

B. A corporation is a distinct entity in the eyes of the law.

3.

C. Corporation ownership is divided into shares of stock.

4.

D. A corporation is owned by shareholders or stockholders.

Which of the following is a licensed accountant who serves the
general public rather than an accountant who serves one
particular company?
1.

A. CPA

2.

B. CMA

3.

C. SEC

4.

D. FASB

The Sarbanes-Oxley Act ("SOX". made it a criminal offense to:


1.

A. steal shareholders' money.

2.

B. default on loans from creditors.

3.

C. declare bankruptcy.

4.

D. falsify financial information.

Which of the following is NOT a characteristic of a traditional
partnership?
1.
2.

3.
4.

A. A partnership is owned by shareholders or stockholders.
B. If a partnership cannot pay its debts, lenders can take the owners'
personal assets to satisfy the obligations.

C. A partnership joins two or more individuals as co-owners.
D. Each partner has the authority to commit the entire partnership to a
binding contract.

The Ragun Cajun Bar and Grill, Inc. has been a popular
restaurant in Beaumont, Texas. With no insurance, a recent
hurricane has left the business with large losses due to a
damaged building and lost business income. Which of the
following concepts or principles of accounting will be of the
greatest concern to Ragun Cajun's auditors?
1.

A. Going-concern concept

2.

B. Faithful representation principle

3.

C. Entity concept

4.

D. Stable monetary unit concept

Which of the following is a characteristic of a limited liability
partnership (LLP.?
1.

A. A limited liability partnership issues shares of stock to shareholders.

2.

B. Each partner is liable only for the actions under his or her control.

3.

C. A limited liability partnership is owned by a single investor.


4.

D. The limited liability partners are subject to "double taxation."

Which of the following are likely to be users of financial
accounting information?
1.

A. Taxing authorities

2.

B. Creditors

3.

C. Potential investors

4.

D. All of the above

Lindsey Smith decided to start her own CPA practice as a
professional corporation, Smith CPA PC. Her corporation
purchased an office building for $35,000 which her real estate
agent said was worth $50,000 in the current market. The
corporation records the building as a $50,000 asset because
Lindsey believes that is the real value of the building. Which of
the following concepts or principles of accounting is being
violated?
1.

A. Cost principle

2.

B. Entity concept

3.

C. Stable monetary unit concept

4.

D. Going-concern concept

A corporation has all of the following EXCEPT:
1.

A. a state charter.

2.

B. a board of directors.

3.

C. unlimited liability for shareholders.

4.

D. shares of stock.

Caleb Brown has been the sole owner of a bicycle sales and
repair shop for many years. Which of the following business types
would best protect Caleb's personal assets from product liability
exposure?


1.

A. Partnership

2.

B. Limited liability company

3.

C. Proprietorship

4.

D. Not-for-profit

The separation between the owners and the managers of a
business is most distinct in a(n.:
1.

A. corporation.

2.

B. LLP.

3.

C. partnership.

4.

D. proprietorship.

Which of the following statements BEST defines financial
statements?
1.

A. Financial statements are the information system that records and
measures business transactions.

2.

B. Financial statements are the verbal statements made to business news
organizations by chief financial officers.

3.

C. Financial statements are documents that report on a business in
monetary terms, providing information to help people make informed
business decisions.

4.

D. Financial statements are plans and forecasts for future time periods.

There are relatively few types of revenue. Which of the following
in NOT a type of revenue?
1.

A. Common Stock

2.

B. Service

3.

C. Interest

4.

D. Sales

A corporation is a legal entity entirely distinct from its:


1.

A. proprietors.

2.

B. vendors.

3.

C. customers.

4.

D. stockholders.

Accountants often refer to GAAP. What do the letters GAAP
represent in accounting?
1.

A. Globally accepted and accurate policies

2.

B. Global accommodation accounting principles

3.

C. Generally accredited accounting policies

4.

D. Generally accepted accounting principles

Stockholders' equity is $150,000 and total liabilities are $90,000.
Total assets would be:
1.

A. $300,000.

2.

B. $180,000.

3.

C. $60,000.

4.

D. $240,000.

Bill Rogers has three different businesses. He has only one bank

account for transactions relating to all his various businesses.
Which of the following concepts or principles of accounting is Bill
violating?
1.

A. Faithful representation principle

2.

B. Entity concept

3.

C. Cost principle

4.

D. Going-concern concept

Items such as buildings and land are:


1.

A. liabilities.

2.

B. equity.

3.

C. assets.

4.

D. revenues.

Dylan Chase is a partner in a CPA practice. One of Dylan's
partners sometimes takes a very aggressive position when
auditing clients. Which of the following business types would
protect Dylan's personal assets from malpractice liability for his
partner's aggressive auditing tactics?
1.

A. Limited liability partnership

2.

B. Traditional partnership

3.

C. Not-for-profit

4.

D. Proprietorship

Many organizations have contributed to the establishment of

generally accepted accounting principles. Which of the following
organizations has the primary responsibility for formulating
accounting standards?
1.

A. FASB

2.

B. CMA

3.

C. AICPA

4.

D. SEC

Which of the following is TRUE for a proprietorship?
1.

A. A proprietorship joins two or more individuals as co-owners.

2.

B. The proprietor is not personally liable for the debts of the proprietorship.

3.

C. A proprietorship has a single owner.

4.

D. A proprietorship has an indefinite life.


A promise received from a company's customers to pay for goods
and services that they received from the company is called a(n.:
1.

A. account receivable.

2.

B. account payable.

3.

C. revenue.

4.

D. expense.

Accounting standards are formulated by the:
1.

A. SEC.

2.

B. AICPA.

3.

C. FASB.

4.

D. IRS.

Tate Corporation purchased a building for its grocery store for
$30,000 in 1970. Based on inflation estimates, the amount of this
asset has been adjusted in the accounting records. The building
is now reported at $75,000. Which of the following concepts or
principles of accounting is being violated?
1.

A. Going-concern concept

2.

B. Stable monetary unit concept

3.

C. Entity concept

4.

D. None of the above

The largest businesses are usually organized as:
1.

A. corporations.

2.

B. partnerships.

3.

C. proprietorships.

4.

D. LLCs.


A debt that a corporation owes to an outside party is called:
1.

A. an asset.

2.

B. a liability.

3.

C. stockholders' equity.

4.

D. revenue.

Businesses can be organized in a variety of forms. The types of
businesses commonly found in the U.S. include all of the
following EXCEPT:
1.

A. corporations.

2.

B. state government-run companies.

3.

C. partnerships.

4.

D. proprietorships.

By definition, which of the following represent the owners of a
corporation?
1.

A. Customers

2.

B. Creditors

3.

C. Stockholders

4.

D. Employees

If a corporation cannot pay its debts, the creditors may make
claims against the:
1.

A. assets of the shareholders.

2.

B. assets of the company only.

3.

C. assets of the board of directors.

4.

D. employees of the company.


Which of the following concepts (principles. require an
assumption that the entity will remain in operation for the
foreseeable future?
1.

A. Entity concept

2.

B. Faithful representation principle

3.

C. Going-concern concept

4.

D. Cost principle

Phillip and Reed have developed a new technology for home
computer systems. However, they need to raise a large amount of
capital to build the production and support facilities to market their
product successfully. Which of the following business types would
be best suited to help the company raise the necessary capital to
begin production?
1.

A. Corporation

2.

B. Proprietorship

3.

C. Partnership

4.

D. Limited liability partnership

Corporate ownership is a very popular type of ownership in the
United States because:
1.

A. corporate shareholders have limited liability for the debts of the
corporation.

2.

B. most corporations are small or medium-sized companies.

3.

C. the life of a corporation is limited by the death of an owner.

4.

D. a corporation is usually managed by the owners.

In an LLC, who is responsible for the company's debts?
1.

A. The company itself

2.

B. The partners


3.

C. The individual investors

4.

D. The proprietor

The first step in incorporation is to:
1.

A. have the board of directors designate a president.

2.

B. agree to a set of bylaws.

3.

C. issue the first shares of stock.

4.

D. obtain a charter from the state.

The ability to raise large amounts of capital is a key characteristic
of a:
1.

A. partnership.

2.

B. not-for-profit.

3.

C. corporation.

4.

D. proprietorship.

Which of the following statements BEST describes managerial
accounting?
1.

A. Managerial accounting focuses on information for internal decision
making.

2.

B. Managerial accounting focuses on outside investors and lenders.

3.

C. Managerial accounting provides information for the public.

4.

D. Managerial accounting provides information for taxing authorities.

Which of the following organizations requires publicly owned
companies to be audited by independent accountants (CPAs.?
1.

A. SEC

2.

B. PCAOB

3.

C. FASB

4.

D. AICPA

The primary objective of financial reporting is to provide
information useful for making investment and lending decisions.
Which of the following is NOT one of the basic characteristics that
financial information must possess to be useful?
1.

A. Reliability

2.

B. Creativity

3.

C. Relevance

4.

D. Comparability

The owner(s. of a business will most likely face "double taxation"
if their business is organized as a(n.:
1.

A. corporation.

2.

B. LLC.

3.

C. partnership.

4.

D. proprietorship.

David has decided to open an auto-detailing business. He will
pick up an automobile from the client, take it to his parents'
garage, detail it, and return it to the client. If he does all of the
work himself and takes no legal steps to form a special
organization, which type of business organization, in effect, has
he chosen?
1.

A. Limited liability company

2.

B. Partnership

3.

C. Corporation

4.

D. Proprietorship

Which of the following is the CORRECT accounting equation?
1.

A. Assets + Liabilities = Stockholders' equity


2.

B. Assets = Liabilities + Stockholders' equity

3.

C. Assets + Revenue = Stockholders' equity

4.

D. Assets + Revenue = Liabilities + Expenses

A financial examination of a company's financial records is called
a(n.:
1.

A. audit.

2.

B. criminal investigation.

3.

C. financial analysis.

4.

D. appraisal.

Which of the following organizations or groups issue an opinion
on whether a company's financial statements are a fair
representation of the company's financial situation?
1.

A. SEC

2.

B. Board of Directors

3.

C. Shareholders

4.

D. Independent Accountants (CPAs.

110 Free Test Bank for Financial and Managerial
Accounting 3rd Edition by Horngren Multiple Choice
Questions-Page 2
The assets and liabilities of Matt Wesley Corporation are as
follows: Cash, $10,000; Accounts receivable, $8,200; Supplies,
$1,050; Land, $25,000; Accounts payable, $6,530. What is the
amount of stockholders' equity?
1.

A. $21,500

2.

B. $44,430

3.

C. $50,780


4.

D. $37,720

Net income is $29,000. Beginning retained earnings were
$34,000. Ending retained earnings are $55,000. What amount of
cash dividends was paid out?
1.

A. $18,000

2.

B. $8,000

3.

C. $5,000

4.

D. $60,000

Assets are $150,000 and total liabilities are $90,000. Total
stockholders' equity will be:
1.

A. $180,000.

2.

B. $300,000.

3.

C. $240,000.

4.

D. $60,000.

Scott's Camera Shop, Inc. started the year with total assets
$80,000 and total liabilities of $40,000. During the year, the
business earned revenues of $120,000 and incurred expenses of
$70,000. Scott paid dividends of $60,000. The net change in
Scott's stockholders' equity for the year is a:
1.

A. $10,000 decrease.

2.

B. $40,000 increase.

3.

C. $30,000 decrease.

4.

D. $50,000 increase.

The owners' claims to the assets of the business are called:
1.

A. revenues.

2.

B. liabilities.

3.

C. owners' equity.

4.

D. expenses.

Martin Supply Co. received $1,000 cash from a customer which
was owed to the company from the previous month. Which of the
following accounts decreases?
1.

A. Cash

2.

B. Retained earnings

3.

C. Accounts payable

4.

D. Accounts receivable

Martin Supply Co. received $1,000 cash from a customer which

was owed to the company from the previous month. What is the
effect of the cash receipt on the accounts of the company?
1.

A. Accounts receivable decreases; Retained earnings account decreases.

2.

B. Cash account increases; Accounts receivable decreases.

3.

C. Accounts payable increases; Retained earnings account decreases.

4.

D. Cash increases; Accounts payable decreases.

An individual asset has increased. Which of the following is
possible?
1.

A. There is an equal decrease in another asset.

2.

B. There is an equal decrease in stockholders' equity.

3.

C. There is an equal decrease in a liability account.

4.

D. Both liabilities and stockholders' equity decrease.

Hamilton Service Co. incurred an $800 repair expense and paid
the repair company in cash. Which account, besides Cash,
decreased?
1.

A. Retained earnings


2.

B. Accounts payable

3.

C. Common stock

4.

D. Accounts receivable

Hamilton Service Co. incurred a $500 labor expense and
promised to pay the labor agency within 30 days. Which account
increased?
1.

A. Accounts receivable

2.

B. Cash

3.

C. Accounts payable

4.

D. Retained earnings

The business collects a $5,000 account receivable from its
customer. How is the accounting equation affected?
1.

A. Assets increase $5,000; liabilities decrease $5,000.

2.

B. One asset increases by $5,000; another asset decreases $5,000.

3.

C. Assets increase $5,000; liabilities increase $5,000.

4.

D. Assets increase $5,000; stockholders' equity increases $5,000.

Land is purchased by the company for $100,000. The company
pays for land with a $20,000 cash payment and the execution of
an $80,000 promissory note payable to the seller. How does this
purchase affect the company's accounting equation?
1.

A. Assets increase $80,000; liabilities decrease $20,000.

2.

B. Assets increase $20,000; liabilities decrease $80,000.

3.

C. Assets increase $80,000; stockholders' equity increases $80,000.

4.

D. Assets increase $80,000; liabilities increase $80,000.

A $5,000 account payable is paid by the company. How is the
accounting equation affected?


1.

A. Assets decrease $5,000; stockholders' equity increases $5,000.

2.

B. Assets decrease $5,000; liabilities decrease $5,000.

3.

C. Assets increase $5,000; stockholders' equity decreases $5,000.

4.

D. Assets increase $5,000; liabilities increase $5,000.

Land was originally purchased for $20,000. It is sold for $20,000
in cash. How does the sale affect the accounting equation?
1.

A. Assets increase $20,000; liabilities decrease $20,000.

2.

B. Assets increase $20,000; liabilities increase $20,000.

3.

C. Assets increase $20,000; stockholders' equity increases $20,000.

4.

D. Assets increase $20,000; assets decrease $20,000.

A business receives a bill for services rendered from one of its
suppliers. The business will pay the supplier next month. When
the business receives the bill from its supplier, how does this
affect the accounting equation?
1.

A. Assets decrease; stockholders' equity decreases.

2.

B. Liabilities increase; stockholders' equity decreases.

3.

C. Assets increase; liabilities increase.

4.

D. Liabilities increase; stockholders' equity increases.

Total liabilities increase by $7,000. How is the accounting
equation affected?
1.

A. Either assets have increased by $7,000, or stockholders' equity has
decreased by $7,000.

2.

B. Assets have decreased by $7,000.

3.

C. Assets and stockholders' equity have each decreased by $3,500.

4.

D. Stockholders' equity has increased by $7,000.


Hamilton Service Company earned $1,000 for services rendered
and collected cash from its customer. What is the effect on
accounts?
1.

A. Cash account increases; Accounts payable increases.

2.

B. Cash account increases; Accounts receivable increases.

3.

C. Cash account increases; Supplies account decreases.

4.

D. Cash account increases; Retained earnings account increases.

Assets are $270,000 and stockholders' equity is $90,000.
Liabilities will be:
1.

A. $60,000.

2.

B. $360,000.

3.

C. $270,000.

4.

D. $180,000.

Hamilton Service Co. incurred a $500 labor expense and
promised to pay the labor agency within 30 days. Which of the
following accounts decreased?
1.

A. Accounts payable

2.

B. Retained earnings

3.

C. Common stock

4.

D. Accounts receivable

Martin Supply Co. paid $350 cash to a materials supplier that it
owed from the previous month. What is the effect of the cash
payment on the accounts of the company?
1.

A. Materials account increases; Retained earnings account decreases.

2.

B. Cash account decreases; Accounts payable increases.

3.

C. Accounts payable increases; Retained earnings account decreases.


4.

D. Cash account decreases; Accounts payable decreases.

Equipment is sold for cash in an amount equal to the cost of the
equipment recorded on the books. How does this sale affect the
accounting equation?

1.

A. One asset increases; one asset decreases.

2.

B. Assets increase; liabilities increase.

3.

C. Assets increase; liabilities decrease.

4.

D. Assets increase; stockholders' equity increases.

Bill purchased office supplies for $500 cash. What is the effect on
accounts?
1.

A. Cash account increases; Accounts payable increases.

2.

B. Cash account increases; Supplies account increases.

3.

C. Supplies account increases; Cash account decreases.

4.

D. Supplies account increases; Retained earnings account increases.

Joe purchased office equipment for $1,250 cash. What is the
effect on accounts?
1.

A. One asset account increases; one liability account increases.

2.

B. Two asset accounts increase.

3.

C. One asset account increases; another asset account decreases.

4.

D. One asset account increases; one equity account increases.

Scott's Camera Shop, Inc. started the year with total assets
$80,000 and total liabilities of $40,000. During the year, the
business earned revenues of $120,000 and incurred expenses of
$70,000. Scott paid dividends of $60,000. What is the amount of
Scott's Camera Shop Inc.'s net income for the year?
1.

A. $50,000

2.

B. $10,000

3.

C. $30,000

4.

D. $40,000

The business receives cash from a customer that is owed to
company "on account," based on services rendered to the
customer previously. How does the collection of the cash affect
the accounting equation?
1.

A. Assets increase; stockholders' equity increases.

2.

B. Assets increase; liabilities increase.

3.

C. One asset increases; one asset decreases.

4.

D. Assets decrease; stockholders' equity decreases.

Hamilton Service Company earned $1,000 for services rendered.
The customer promised to pay at a later time. What is the effect
on accounts?
1.

A. Accounts receivable decreases; Retained earnings increases.

2.

B. Cash and Accounts receivable both increase.

3.

C. Cash account increases; Accounts receivable decreases.

4.

D. Accounts receivable increases; Retained earnings increases.

Scott's Camera Shop, Inc. started the year with total assets of
$80,000 and total liabilities of $40,000. During the year, the
business earned revenues of $120,000 and incurred expenses of
$70,000. Scott paid dividends of $60,000. What is the amount of
Scott's stockholders' equity at the end of the year?
1.

A. $40,000

2.

B. $50,000

3.

C. $30,000

4.

D. $10,000


Martin Supply Co. paid $350 cash to a materials supplier that it
owed from the previous month. Which of the following accounts
decreases?
1.

A. Accounts receivable

2.

B. Accounts payable

3.

C. Retained earnings

4.

D. Common stock

A corporation pays cash dividends. How does the payment of
these dividends affect the accounting equation?
1.

A. There is no effect on the assets, liabilities, or stockholders' equity.

2.

B. Assets decrease; stockholders' equity decreases.

3.

C. Assets increase; liabilities decrease.

4.

D. Assets decrease; stockholders' equity increases.

A business performs services for its customers. Payment is
expected to be received next month. How does the performance
of services affect the accounting equation?
1.

A. Liabilities increase; stockholders' equity decreases.

2.

B. Assets increase; stockholders' equity increases.

3.

C. Assets decrease; stockholders' equity decreases.

4.

D. Assets increase; stockholders' equity decreases.

Hamilton Service Company earned $1,000 for services rendered.
The customer promised to pay at a later time. Which of the
following accounts increased?
1.

A. Accounts payable

2.

B. Common stock

3.

C. Cash


4.

D. Accounts receivable

Tim invests money into his business in exchange for stock. The
two accounts affected are:
1.

A. an asset and a liability.

2.

B. an asset and an equity.

3.

C. a liability and an equity.

4.

D. two asset accounts.

A business settles a liability by making a payment with cash. How
does paying this liability affect the accounting equation?
1.

A. Assets decrease; liabilities decrease.

2.

B. Liabilities decrease; stockholders' equity increases.

3.

C. Assets increase; liabilities increase.

4.

D. Assets increase; liabilities decrease.

110 Free Test Bank for Financial and Managerial
Accounting 3rd Edition by Horngren Multiple Choice
Questions-Page 3
Net income is $34,000. Beginning retained earnings is $29,000.
Ending retained earnings is $55,000. What was the amount of
dividends paid?
1.

A. $18,000

2.

B. $8,000

3.

C. $60,000

4.

D. $5,000

Beginning retained earnings is $20,000. Dividends paid were

$7,000. Ending retained earnings is $37,000. What was net
income?


1.

A. $24,000

2.

B. $13,000

3.

C. $10,000

4.

D. $27,000

The financial statements should be prepared in what order?
1.

A. Income statement, statement of retained earnings, balance sheet,
statement of cash flows

2.

B. Statement of retained earnings, balance sheet, income statement,
statement of cash flows

3.

C. Balance sheet, statement of retained earnings, income statement,
statement of cash flows

4.

D. Balance sheet, income statement, statement of retained earnings,
statement of cash flows

You can evaluate business performance in terms of profitability by
analyzing which of the following financial statements?
1.

A. Income statement

2.

B. Balance sheet

3.

C. Statement of cash flows

4.

D. None of the above

Financial statements are prepared after an entity's transactions

are analyzed and recorded. Which of the following reports is NOT
one of the required financial statements?
1.

A. Statement of cash flows

2.

B. Balance sheet

3.

C. Statement of dividends paid

4.

D. Income statement


Ace Machine Co. had the following transactions in June: Earned
$4,000 "on account;" collected $3,000 from a customer which was
owed from a previous month; incurred $500 of repair expense
and paid cash to the repairman; paid $1,200 to a supplier that it
owed from the previous month; paid out $800 in cash dividends to
shareholders. How much was the Net income in June?
1.

A. $500

2.

B. $5,700

3.

C. $2,700

4.

D. $3,500

Which of the following amounts appear on both the income
statement and the statement of retained earnings?
1.

A. Ending retained earnings

2.

B. Total revenues

3.

C. Net income

4.

D. Dividends paid

Martin Supply Co. paid $5,000 cash dividends to its shareholders.

Which of the following accounts decreased?
1.

A. Common stock

2.

B. Accounts payable

3.

C. Accounts receivable

4.

D. Retained earnings

ABC Delivery Co. had the following transactions in June: Earned
$4,000 cash for services rendered; collected $2,500 from a
customer "on account;" paid out $200 cash for plumbing services;
received $3,500 of supplies and promised to pay one month later;
paid out $1,000 in cash dividends to shareholders. What is the
combined effect on Retained earnings of the June transactions?


1.

A. Up $2,800

2.

B. Down $300

3.

C. Down $6,300

4.

D. Up $5,300

Which of the following amounts appears on both the income
statement and the balance sheet?
1.

A. Total assets

2.

B. Net income

3.

C. Ending retained earnings

4.

D. None of the above amounts appear on both

The income statement presents a summary of an entity's

revenues and expenses for a period of time. Which of the
following statements is TRUE?
1.

A. There is net income when total revenues are greater than total
expenses.

2.

B. There is a net loss when total expenses are greater than total revenue.

3.

C. There is a net loss when dividends are paid.

4.

D. Both A and B are true.

Which of the following financial statements reports expenses in
decreasing order of their amount, with the largest expense first?
1.

A. Statement of cash flows

2.

B. Income statement

3.

C. Statement of retained earnings

4.

D. Balance sheet

Which of the following financial statements reports an increase or
decrease in net cash during the time period covered?


1.

A. Income statement

2.

B. Statement of retained earnings

3.

C. Statement of cash flows

4.

D. Balance sheet

Beginning retained earnings was $25,000. Ending retained
earnings is $37,000. Dividends paid were $23,000. What was net
income or loss for the year?

1.

A. Net income of $16,000

2.

B. Net loss of $35,000

3.

C. Net loss of $14,000

4.

D. Net income of $35,000

You can evaluate the economic resources, debt, and overall
financial position of a company in which of the following financial
statements?
1.

A. Income statement

2.

B. Balance sheet

3.

C. Statement of cash flows

4.

D. Statement of retained earnings

The statement of retained earnings shows the changes in
retained earnings. Which one of these statements is TRUE?
1.

A. Increases in Retained earnings result from owner investments.

2.

B. Decreases in Retained earnings result from net losses.

3.

C. Increases in Retained earnings result from net losses.

4.

D. Decreases in Retained earnings result from revenues earned.