Which of the following correctly describes retained earnings?

A) It is the cumulative earnings of a company.
B) It represents the investments by stockholders in a company.
C) It equals total assets minus total liabilities.
D) It is the cumulative earnings of a company less dividends declared.

Question

Ashwini Jagathes · Accepted Answer

Final Answer : D, Explanation :  Retained earnings refer to the amount of cumulative earnings that a company has accumulated over time, less any dividends that have been paid out to shareholders. Option A is close, but it doesn't account for the dividends that have been paid out. Options B and C are incorrect as they don't accurately describe retained earnings.

Which of the following correctly describes retained earnings?

A) It is the cumulative earnings of a company.
B) It represents the investments by stockholders in a company.
C) It equals total assets minus total liabilities.
D) It is the cumulative earnings of a company less dividends declared.

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Learning Objectives

Related questions

Which of the following correctly describes retained earnings?A) It is the cumulative earnings of a company.B) It represents the investments by stockholders in a company.C) It equals total assets minus total liabilities.D) It is the cumulative earnings of a company less dividends declared.

Definitions

Learning Objectives

Learning Objectives

Related questions

Which of the following correctly describes retained earnings?

A) It is the cumulative earnings of a company.
B) It represents the investments by stockholders in a company.
C) It equals total assets minus total liabilities.
D) It is the cumulative earnings of a company less dividends declared.