A company's retained earnings balance increased $50,000 last year;therefore,net income last year must have been $50,000.

Question

Quizplus · Accepted Answer

Retained earnings can increase due to factors other than just net income, such as asset sales or changes in accounting policies. Therefore, it is not necessarily true that net income must have been $50,000 if the retained earnings balance increased by that amount.

A Company's Retained Earnings Balance Increased $50,000 Last Year;therefore,net Income