All of the following statements regarding retained earnings are true except
A) retained earnings represents a claim on cash.
B) a debit balance in Retained Earnings indicates a deficit.
C) some companies may restrict availability of retained earnings for dividends.
D) retained earnings is net income that a company retains in a business.

Question

Quizplus · Accepted Answer

Retained earnings do not represent a claim on cash; they are part of shareholders' equity and reflect the cumulative net income retained in the company rather than distributed as dividends.

All of the Following Statements Regarding Retained Earnings Are True