Retained earnings are a portion of owner's equity that has:
A) accumulated over time, but hasn't been paid to investors through dividends.
B) all forms of long-term liabilities.
C) been paid to owners in dividends.
D) been used to pay debts.
E) none of these

Question

Quizplus · Accepted Answer

Retained earnings represent the portion of owner's equity that has accumulated over time and has not been distributed to shareholders as dividends. Therefore, option A is the correct answer. Option B refers to all forms of long-term liabilities, which is not related to retained earnings. Option C states that retained earnings have been paid to owners in dividends, which is the opposite of what they represent. Option D implies that retained earnings have been used to pay debts, which is possible, but not the primary purpose. Option E is a general statement that does not provide any specific information.

Retained Earnings Are a Portion of Owner's Equity That Has