The classification and normal balance of the retained earnings account is
A)asset, debit.
B)shareholders' equity, credit.
C)revenues, credit.
D)liability, debit.

Question

Quizplus · Accepted Answer

Retained earnings is a part of shareholders' equity and has a credit normal balance. It represents the portion of net income earned by a company that is not distributed as dividends to shareholders but is instead kept for future investments or growth opportunities. Therefore, option B (shareholders' equity, credit) is the correct classification and normal balance for the retained earnings account.

The Classification and Normal Balance of the Retained Earnings Account