If the retained earnings account increases from the beginning of the year to the end of the year, then:
A)profit is greater than dividends.
B)a loss is less than dividends.
C)additional investments are less than reported losses.
D)no dividends were paid.

Question

Quizplus · Accepted Answer

Retained earnings represent the portion of a company's net income that is kept by the company instead of being paid out as dividends to shareholders. If the retained earnings account increases from the beginning of the year to the end of the year, it means that the company made more profit than it paid out in dividends. Therefore, choice A is the correct answer. Choices B, C, and D are incorrect because they do not accurately reflect the relationship between retained earnings, profit, losses, and dividends.

If the Retained Earnings Account Increases from the Beginning of the Year