Retained Earnings represent:
A)The profits of the company.
B)The investments of the owners.
C)The profits of the company plus the investments of the owners.
D)The total earnings of the company,less the dividends distributed to the owners and less any losses.

Question

Quizplus · Accepted Answer

Retained Earnings represent the portion of net income that is not distributed as dividends or withdrawn by the owners. Therefore, it is the total earnings of the company, less the dividends distributed to the owners and less any losses. Option A (The profits of the company) is incorrect as it does not take into account any distributions to the owners, whereas retained earnings specifically refers to the earnings that have not been distributed. Option B (The investments of the owners) is incorrect as it does not include any profits or losses generated by the company. Option C (The profits of the company plus the investments of the owners) is incorrect as it is a combination of options A and B, neither of which are entirely accurate.

Retained Earnings Represent