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

Question

Quizplus · Accepted Answer

Retained earnings increase when the company's net income (earnings after expenses and taxes) for the period is greater than the dividends declared (distributed to shareholders). This means the company retained more of its earnings rather than distributing them. Choices B, C, and D do not directly relate to the increase in retained earnings from net income exceeding dividends.

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