1.The income statement reports the changes in the retained earnings for a period of time.

True

False

2.The purchase of land in exchange for cash is recorded with a debit to cash and a credit to land

True

False

3.Which of the following type(s) of accounts affect equity?

Common stock

Dividends

Retained earnings

All of the above

4The cash basis of accounting recognizes expenses when the cash is paid.

True

False

5.The stockholders' equity at the beginning of the period was $200,000; at the end of the period, assets were $255,000 and liabilities were $40,000.

If the owner made no additional investments or paid no dividends during the period, did the business incur a net income or a net loss for the periodand how much?