If a firm retains earnings, total equity increases.

Name: If a firm retains earnings, total equity increases.
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Retained earnings are a portion of a company's profit that is held or retained and saved for future use, such as reinvestment in the business or to pay debt. They are recorded under shareholders' equity on the balance sheet. When a firm retains earnings, it is essentially adding to its accumulated profits, which increases the total equity of the company.

If a Firm Retains Earnings, Total Equity Increases