To compute the ending balance of retained earnings:
A) the beginning balance in retained earnings will be zero for a new business.
B) net income for the period is subtracted from the beginning balance.
C) dividends are added to the beginning balance.
D) common stock sold during the period is added to the beginning balance.

Question

Quizplus · Accepted Answer

For a new business, the beginning balance in retained earnings is zero because there are no prior earnings to retain.

To Compute the Ending Balance of Retained Earnings