Retained earnings is
A) always equal to the amount of cash that the corporation has generated from operations.
B) a part of the contributed capital of the corporation.
C) a part of the shareholders' claim on the total assets of the corporation.
D) closed at the end of each accounting period.

Question

Quizplus · Accepted Answer

Retained earnings represent the cumulative amount of net income that a company has reinvested in itself rather than distributing to its shareholders as dividends. It is a part of the shareholders' equity section on the balance sheet, reflecting the shareholders' claim on the total assets of the corporation. It is not always equal to cash generated, not part of contributed capital, and is not closed at the end of each accounting period but rather adjusted for net income or loss and dividends.

Retained Earnings Is