Asked by Efrem Wondale on Jul 18, 2024
Verified
Retained earnings
A) is unique to the corporate form of business.
B) is an optional account in the partnership form of business.
C) reflects cash paid in by stockholders to date.
D) is closed at the end of the year.
Retained Earnings
The portion of net income left over after dividends are paid to shareholders, reinvested in the business or used to pay off debt.
Corporate Form
A legal structure for a business recognized as a separate legal entity from its owners, providing limited liability.
Partnership Form
A legal form of business operation between two or more individuals who share management and profits.
- Comprehend the significance and accounting treatment of retained earnings within a corporation.
Verified Answer
BG
brenda gamezJul 21, 2024
Final Answer :
A
Explanation :
Retained earnings are a feature of the corporate form of business where profits are kept in reserve for future use rather than being distributed to shareholders as dividends. It is not an optional account in the partnership form of business, nor does it reflect cash paid in by stockholders to date. Retained earnings are not closed at the end of the year, as they carry forward from one year to the next.
Learning Objectives
- Comprehend the significance and accounting treatment of retained earnings within a corporation.