Which of the following statements is true?
A) Retained earnings is an asset.
B) Retained earnings represents the future dividend liability of the company.
C) Retained earnings has a debit balance for a successful corporation.
D) Retained earnings represents the profit that has been earned by the company, less any dividends declared since the first day of operations.

Question

Quizplus · Accepted Answer

Retained earnings represents the profit that has been earned by the company, less any dividends declared since the first day of operations. Therefore, option D is the correct answer. Option A is incorrect because retained earnings is not an asset, rather it is part of the equity section of the balance sheet. Option B is incorrect because retained earnings represents the earnings that are retained by the company and are not paid out as dividends. Option C is also incorrect because retained earnings have a credit balance for a successful corporation.

Which of the Following Statements Is True