The balance in retained earnings at the end of the year is determined by retained earnings at the beginning of the year:
A) Plus revenues, minus liabilities.
B) Plus accruals, minus deferrals.
C) Plus net income, minus dividends.
D) Plus assets, minus liabilities.

Question

Quizplus · Accepted Answer

The balance in retained earnings at the end of the year is determined by adding the net income to the beginning balance of retained earnings and then subtracting any dividends paid during the year. This is represented by the formula: Beginning Retained Earnings + Net Income - Dividends = Ending Retained Earnings. Therefore, option C which states "Plus net income, minus dividends" is the correct answer. The other options do not accurately reflect how retained earnings are calculated.

The Balance in Retained Earnings at the End of the Year