If the retained earnings account increases from the beginning of the year to the end of the year, then
A) net income is less than dividends.
B) a net loss is less than dividends.
C) the company must have sold stock.
D) net income is greater than dividends.

Question

Quizplus · Accepted Answer

Retained earnings is the accumulation of a company's net income earned over time, minus any dividends distributed. Therefore, if the retained earnings account increases from the beginning of the year to the end of the year, it means that the company's net income is greater than any dividends distributed during that time period.

If the Retained Earnings Account Increases from the Beginning of the Year