The retained earnings account has a beginning balance of $321,975 and an ending balance of $356,413. Net income is $40,251. Which of the following statements is true?
A) $5,813 would be subtracted when determining cash flows from financing activities.
B) $40,251 would be added when determining cash flows from financing activities.
C) $34,438 would be added when determining cash flows from financing activities.
D) $321,975 would be added when determining cash flow from operating activities.

Question

Quizplus · Accepted Answer

The change in retained earnings is due to net income and dividends. The difference between the beginning and ending retained earnings is $34,438, which means dividends of $5,813 were paid ($40,251 net income - $34,438 change in retained earnings). Dividends are subtracted in cash flows from financing activities.

The Retained Earnings Account Has a Beginning Balance of $321,975