Which of the following will decrease retained earnings?
A) Supplies are purchased on account.
B) Dividends are declared and paid.
C) Cash is received from customers.
D) Payment is made on an accounts payable.

Question

Quizplus · Accepted Answer

Retained earnings are the profits that a company decides to keep within the business rather than distribute as dividends to shareholders. When dividends are declared and paid, it reduces the amount of retained earnings on the balance sheet. Therefore, choice B is the correct answer as it represents a decrease in retained earnings.

Which of the Following Will Decrease Retained Earnings