A reason why profits may be retained in a business rather than withdrawn by the owners is:
A) to fund future growth of the business.
B) because the business is able to generate greater returns on the funds than could be obtained if the owner invests them elsewhere.
C) to gain tax advantages.
D) all of the above.

Question

Quizplus · Accepted Answer

Retaining profits in a business can be beneficial for funding future growth by reinvesting the funds back into the business. Additionally, if the business is able to generate greater returns on the funds than the owner could obtain elsewhere, it may be beneficial to retain the profits. Finally, there may be tax advantages to retaining profits, such as deferring taxes or using profits to offset losses in future years. Therefore, all of the above reasons may be a justification for retaining profits in a business rather than withdrawing them.

A Reason Why Profits May Be Retained in a Business