The balance in the retained earnings account represents: a) The total profits of the companyb) The amount of dividends paid to shareholdersc) The accumulated profits of the company not yet distributed to shareholdersd) The cash available for the company’s operations

The balance in the retained earnings account represents: a) The total profits of the companyb) The amount of dividends paid to shareholdersc) The accumulated profits of the company not yet distributed to shareholdersd) The cash available for the company’s operations

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 2QTD

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Question

The balance in the retained earnings account represents:

a) The total profits of the company
b) The amount of dividends paid to shareholders
c) The accumulated profits of the company not yet distributed to shareholders
d) The cash available for the company’s operations

Definition Definition Remaining net income of the company after the required dividends are paid to shareholders. This surplus money is usually invested back into the business to expand its business operations or launch a new product.

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Retained earnings is accurately described by all except which of the following statements? A. Retained earnings is the primary component of a companys earned capital. B. Dividends declared are added to retained earnings. C. Net income is added to retained earnings. D. Net losses are accumulated in the retained earnings account.
Owners equity represents which of the following? A. the amount of funding the company has from issuing bonds B. the sum of the retained earnings and accounts receivable account balances C. the total of retained earnings plus paid-in capital D. the business owners/owners share of the company, also known as net worth or net assets
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The balance of the Retained Earnings account represents: cash set aside for specific use cash available for daily operations an excess of revenues over expenses for the current period profits of a company since the date of its beginning less any losses, dividends to stockholders and any transfers to Contributed Capital None of these