Which of the following best describes the appropriation of retained earnings?
A) restricting part of retained earnings for expansion or contingencies
B) setting cash aside for expansion
C) designating certain amounts of retained earnings for cash dividends that are required to be paid to shareholders
D) limiting company transactions in order to boost earnings

Question

Quizplus · Accepted Answer

Appropriation of retained earnings refers to the allocation of a portion of the retained earnings for specific purposes. Option A correctly describes the appropriation of retained earnings as the restriction of some part of the earnings for future expansion or to deal with unforeseen contingencies. Option B is incomplete as it only mentions setting aside cash for expansion but does not explain how this relates to the appropriation of retained earnings. Option C is incorrect as designating retained earnings for cash dividends is not an appropriation of earnings but rather a distribution. Option D is also incorrect as limiting transactions to boost earnings is unrelated to the appropriation of retained earnings.

Which of the Following Best Describes the Appropriation of Retained