Asked by Justin Maynes on Jul 06, 2024
Verified
Retained earnings are:
A) a liability
B) profits that have not been distributed to shareholders as dividends
C) the equivalent of stock
D) the same as cash
Retained Earnings
Retained earnings are the portion of a company's profits that is kept or retained within the business for reinvestment or to pay debt, rather than being distributed to shareholders as dividends.
Liability
A company's legal financial debts or obligations that arise during the course of business operations.
Dividends
Regular payments made by a corporation to its shareholders out of its profits or reserves.
- Fathom the interplay between sales, EBIT, net income, dividends, and alterations in equity.
Verified Answer
ZK
Zybrea KnightJul 07, 2024
Final Answer :
B
Explanation :
Retained earnings are profits earned by a company that are not distributed to shareholders as dividends, but are instead kept by the company to reinvest in the business or use for other purposes. They are not a liability, equivalent to stock, or the same as cash.
Learning Objectives
- Fathom the interplay between sales, EBIT, net income, dividends, and alterations in equity.