Which of the following equations is correct?

Question

Quizplus · Accepted Answer

The correct equation for calculating retained earnings is:

Retained earnings (up to the end of previous period) + Net income (after tax) of the year - Dividends declared - Transfers to reserves = Retained earnings (at year-end)

This equation takes into account the net income earned during the year and any changes in reserves, as well as any dividends paid out to shareholders. By subtracting these amounts from the retained earnings at the end of the previous period, we can calculate the retained earnings at the end of the current period.

Which of the Following Equations Is Correct