The amount shown on the December 31, 2009 balance sheet as "retained earnings" is equal to the firm's net income for 2009 minus any dividends it paid.

Question

Quizplus · Accepted Answer

Retained earnings is equal to the cumulative net income of a company minus any dividends paid to shareholders. The balance sheet only shows the ending balance of retained earnings, not the net income for the current year. A separate income statement would show the net income for the year.

The Amount Shown on the December 31, 2009 Balance Sheet