At the start of the first year of operations,a company's retained earnings on the balance sheet would be:
A)equal to zero.
B)equal to contributed capital.
C)equal to shareholders' equity.
D)equal to the negative of liabilities.

Question

Quizplus · Accepted Answer

Retained earnings are the cumulative profits of a company that have not been distributed as dividends to shareholders. Since it is the first year of operations, the company has not yet generated any profits, and therefore its retained earnings would be equal to zero.

At the Start of the First Year of Operations,a Company's