Which of the following statements regarding the retained earnings account is NOT true?
A)It normally has a credit balance.
B)Its balance is increased by revenues.
C)Its balance is decreased by expenses.
D)Its balance is increased by the declaration of dividends.

Question

Quizplus · Accepted Answer

The retained earnings account balance is not increased by the declaration of dividends; instead, it is decreased. Retained earnings represent the cumulative amount of earnings of a company that have not been distributed to shareholders as dividends. When dividends are declared, they reduce the amount of retained earnings because they represent a distribution of the company's earnings to its shareholders.

Which of the Following Statements Regarding the Retained Earnings Account