Which three of the following statements correctly describe the situation regarding retained earnings?

Question

Quizplus · Accepted Answer

Retained earnings are indeed seen as belonging to the shareholders since they represent the portion of the net income that was not paid out as dividends. They are a crucial source of long-term finance for many corporations because they can be used to reinvest in the business without the need to incur debt or issue new shares. Retained earnings are also part of the equity of the firm, as they contribute to the owners' claim on the company's assets.

Which Three of the Following Statements Correctly Describe the Situation