Retained earnings will be increased by the amount in the dividend account.

Question

Quizplus · Accepted Answer

Retained earnings are the portion of a company's profit that is kept for reinvestment or future use. Dividends are payments made to shareholders from a company's profits. Paying dividends reduces retained earnings, as it represents a distribution of the company's profits to shareholders. Therefore, retained earnings will not be increased by the amount in the dividend account.

Retained Earnings Will Be Increased by the Amount in the Dividend