- CFA Exams
- CFA Level I Exam
- Study Session 10. Equity Valuation (2)
- Reading 26. Industry and Company Analysis
- Subject 3. Balance sheet and cash flow statement modeling
CFA Practice Question
Which balance sheet line item is closely related to income statement projections?
B. retained earnings.
C. invested capital.
A. accounts receivable.
B. retained earnings.
C. invested capital.
Correct Answer: A
Retained earnings flow directly from the income statement.
User Contributed Comments 3
| User | Comment |
|---|---|
| tbg091789 | The 1st sentence in Subject 3 says so. |
| akirchner1 | Some balance sheet line items such as retained earnings flow directly from the income statement whereas other lines, such as accounts receivables are very closely linked to the income statement projections. |
| jimmyvo | Per both the the Subject #3 reading here and the CFAI textbook. Account Receivable is closely related to projections. Retained earnings flow directly from income statement. |