In the context of owners' equity, which of the following is true of retained earnings?
A) They refer to a firm's additional profits that are used for paying executive salary.
B) They are accumulated earnings reinvested in a company rather than being paid to the owners.
C) They are a firm's earnings that are kept aside for crisis management situations.
D) They refer to salaries that are withheld in case an employee is involved in fraudulent activities.

Question

Quizplus · Accepted Answer

Retained earnings are the portion of a company's profits that are not distributed as dividends to shareholders but are instead reinvested in the business or used to pay down debt.

In the Context of Owners' Equity, Which of the Following