How do revenues for a period relate to the beginning and ending balances in retained earnings?
A) Revenues less expenses will either increase or decrease the ending balance of retained earnings for the period.
B) Revenues will increase the beginning balance of retained earnings for the period.
C) Revenues will decrease the beginning balance of retained earnings for the period.
D) Revenues less expenses will either increase or decrease the beginning balance of retained earnings for the period.

Question

Quizplus · Accepted Answer

Revenues less expenses (net income or net loss) is one of the components of retained earnings. Therefore, if revenues exceed expenses, this will result in an increase in the ending balance of retained earnings for the period. Conversely, if expenses exceed revenues, this will result in a decrease in the ending balance of retained earnings for the period.

How Do Revenues for a Period Relate to the Beginning