Retained earnings
A) is the same as contributed capital
B) cannot have a debit balance
C) changes are summarized in the retained earnings statement
D) is equal to cash on hand

Question

Quizplus · Accepted Answer

Retained earnings represent the cumulative profits earned by a company that have not been paid out as dividends. They are not the same as contributed capital (the money invested by shareholders). Retained earnings can have a debit or credit balance, depending on whether the company has made profits or losses. The changes in retained earnings are summarized in the retained earnings statement, which shows the beginning balance of retained earnings, the net income or loss for the period, and any dividends paid out to shareholders. Retained earnings are not equal to cash on hand, as they represent profits that have not yet been distributed to shareholders.

Retained Earnings