Retained earnings at the end of the period are equal to:
A) assets minus dividends.
B) retained earnings at the beginning of the period plus profit earned for the period.
C) retained earnings at the beginning of the period plus profit earned for the period minus dividends.
D) retained earnings at the beginning of the period plus profit earned for the period minus expenses.

Question

Quizplus · Accepted Answer

Retained earnings are the portion of a company's net income that is not paid out as dividends but retained for reinvestment or other business purposes. Therefore, the retained earnings at the end of the period can be calculated by adding the beginning balance of retained earnings to the profit earned during the period and then subtracting any dividends paid out to shareholders during the same period. Choice C reflects this calculation.

Retained Earnings at the End of the Period Are Equal