At the start of the first year of operations, retained earnings on the balance sheet would be:
A) equal to zero.
B) equal to contributed capital.
C) equal to stockholders' equity.
D) equal to the negative of liabilities.

Question

Quizplus · Accepted Answer

Retained earnings represent the cumulative profits of a company that have not been distributed as dividends. Since it is the first year of operation, there would be no profits earned yet, hence retained earnings would be equal to zero.

At the Start of the First Year of Operations, Retained