Practice prompt · Q:transactions-to-statements/statement-articulation-001

Diagnose a broken statement set

Practice checking ending position, equity rollforward, contra asset presentation, and cross statement consistency.

Updated Sep 5, 2026 Review due Nov 6, 2026

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An income statement reports $7,000 net income. A statement of changes in equity reports $29,000 ending equity. A separately exported balance sheet reports $33,000 total assets, $5,000 liabilities, and $28,000 equity. All files claim the same entity, December 31 date, annual period, US-dollar unit, and adjusted version; the adjusted ledger supports $34,000 assets and $5,000 liabilities. Which conclusion is correct?

Choose the best answer. A Accept the reports because each one balances internally. B Insert an unexplained $1,000 adjustment to Retained Earnings. C Use the adjusted ledger to correct the balance sheet to $34,000 of assets, $5,000 of liabilities, and $29,000 of equity. D Change Accounts Payable by $1,000 so the existing equity figure can remain.

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Answer: C

The common adjusted ledger supports $7,000 net income and $29,000 ending equity: $24,000 beginning equity plus $7,000 income less $2,000 distributions. The correct ending balance sheet has $34,000 assets, $5,000 liabilities, and $29,000 equity. A version reporting $28,000 equity and $33,000 total assets is stale or incorrectly mapped even if it balances internally. Choice C is correct.