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 correct?
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 flows from operating activities.

Question

Quizplus · Accepted Answer

Cash dividends paid in the amount of $5,813 (see calculation below)would be reported as cash outflows from financing activities.
Ending Retained Earnings = Beginning Retained Earnings + Net income − Cash dividends paid
Cash dividends paid = Beginning Retained Earnings + Net income − Ending Retained Earnings = $321,975 + $40,251 − $356,413 = $5,813

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