On the statement of retained earnings:
A) there will be a positive balance in retained earnings if historically expenses have exceeded revenues.
B) a deficit will result in retained earnings if historically, expenses have exceeded revenues.
C) any dividends paid during the year will increase retained earnings.
D) a deficit in retained earnings indicates the company has no cash.

Question

Quizplus · Accepted Answer

A deficit in retained earnings means that the company has accumulated losses over time, which can happen if expenses have exceeded revenues in the past.

Answer: C
 Dividends paid during the year will decrease retained earnings, not increase them. Therefore, this statement is false.

Overall, only choice B is correct.

On the Statement of Retained Earnings