XYZ Company had a net income of $40 million in 2018. The firm paid no dividends. If there were no further changes to the stockholders' equity accounts, then ____________ by $40 million.

Question

Quizplus · Accepted Answer

Retained earnings increase when a company earns profit and does not distribute it as dividends. Since XYZ Company had a net income of $40 million and paid no dividends, its retained earnings would have increased by $40 million.

XYZ Company Had a Net Income of $40 Million in 2018