The balance sheet item that represents the portion of equity resulting from profitable operation of the business is:
A) Accounts receivable.
B) Cash.
C) Share capital.
D) Retained earnings.

Question

Quizplus · Accepted Answer

Retained earnings represent the portion of equity resulting from profitable operation of the business. This is the amount of accumulated net income that has not been distributed to shareholders in the form of dividends. Accounts receivable and cash are both assets, while share capital represents the amount of capital that has been invested by shareholders in the business.

The Balance Sheet Item That Represents the Portion of Equity