Retained earnings at the end of the period is equal to
A) retained earnings at the beginning of the period plus net income minus liabilities.
B) retained earnings at the beginning of the period plus net income minus dividends.
C) net income.
D) assets plus liabilities.

Question

Quizplus · Accepted Answer

Retained earnings at the end of the period is calculated by adding the beginning balance of retained earnings to the net income earned during the period and then subtracting any dividends paid out to shareholders. Therefore, the correct formula is retained earnings at the beginning of the period plus net income minus dividends. Choice B is the only option that correctly includes dividends.

Retained Earnings at the End of the Period Is Equal