WHICh three retained earnings, and how do they affect it? . items affect 9. The framework used to record and summarize the economic activities of a business enterprise is referred to as the accounting equation. State the basic accounting equation and define its major components. How are financial statements related to the accounting equation? 10. What types of information are presented in the notes to the financial statements? 11. Identify the two parts of stockholders' equity in a corporation and indicate the purpose of each. Page 1 12. What do these classes of ratios measure? (a) Liquidity ratios. (b) Profitability ratios. (c) Solvency ratios