If the retained earnings account increases from the beginning of the year to the end of the year, then
A)profit is greater than dividends.
B)a loss is less than dividends.
C)additional investments are less than reported losses.
D)dividends were received.

Question

Quizplus · Accepted Answer

Retained earnings is the portion of a company's profits that is not distributed as dividends but is instead re-invested in the business or used to pay off debt. If retained earnings increases, it means that the company made a profit during the year that exceeded the amount of dividends paid out to shareholders. Therefore, choice A is the correct answer. The other choices do not accurately reflect the relationship between retained earnings and dividends.

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