Which statement best defines retained earnings?
A) They are the amounts paid out as dividends.
B) They are the amount of revenues a corporation receives for the sale of its products, minus its costs of production, as measured by its accountants.
C) They are interest paid to creditors.
D) They are profits not paid out to shareholders.

Question

Quizplus · Accepted Answer

Retained earnings are profits that a company chooses to keep and reinvest in the business instead of paying out as dividends to shareholders. These earnings are listed on the company's balance sheet as a component of shareholder equity.

Which Statement Best Defines Retained Earnings