Asked by Danielle Szajdek on Apr 27, 2024
Verified
When an owner invests assets in the business, the retained earnings account increases due to revenue being earned.
Owner Invests
occurs when the owner of a business contributes assets, commonly in the form of cash or equipment, into the business for its use.
Retained Earnings
The portion of a company's profits that is kept or retained and not paid out as dividends to shareholders, often used for reinvestment.
Revenue
Income generated from normal business operations and includes discounts and deductions for returned merchandise.
- Familiarize oneself with the diverse kinds of accounts (assets, liabilities, equity) and their standard balances.
Verified Answer
RC
Renee ColonApr 30, 2024
Final Answer :
False
Explanation :
The retained earnings account increases due to profits being earned, not necessarily because of an owner's investment of assets.
Learning Objectives
- Familiarize oneself with the diverse kinds of accounts (assets, liabilities, equity) and their standard balances.