When a firm has earnings it has not yet paid out to the owners, those earnings are called
A) surplus capital.
B) cash reserves.
C) retained earnings.
D) unearned income.

Question

Quizplus · Accepted Answer

Retained earnings refer to the portion of a company's profits that are not distributed as dividends to shareholders, but rather kept by the company for future use. This money may be used to reinvest in the business, pay off debt, or save for future expenses. Surplus capital and cash reserves may refer to funds held by the company, but do not specifically indicate un-distributed earnings. Unearned income refers to income that has been received but has not yet been earned, and is not applicable in this scenario.

When a Firm Has Earnings It Has Not Yet Paid