When a firm reinvests some of its net income rather than distributing it all to owners,the result for the firm is an increase in which of the following?
A)covenants
B)net liabilities
C)retained earnings
D)dividends

Question

Quizplus · Accepted Answer

When a firm reinvests some of its net income, it retains the earnings within the company rather than paying them out as dividends to owners. This increases the amount of money in the company's retained earnings account, which can be used for future investments or to pay off debts. A) Covenants and B) net liabilities are not affected by a firm's decision to reinvest net income. D) Dividends would decrease if the firm chooses to reinvest net income instead of distributing it to owners.

When a Firm Reinvests Some of Its Net Income Rather