To compute ending balance of retained earnings on the statement of retained earnings:
A)net loss is added to the beginning balance of retained earnings and dividends that were declared and paid are subtracted from the beginning balance of retained earnings.
B)net income and dividends are both added to the beginning balance of retained earnings.
C)net loss and dividends are both added to the beginning balance of retained earnings.
D)net income is added to the beginning balance of retained earnings.

Question

Quizplus · Accepted Answer

Net income increases retained earnings and is added to the beginning balance of retained earnings. Net losses and dividends, if they were mentioned, would decrease retained earnings, not increase it.

To Compute Ending Balance of Retained Earnings on the Statement