A credit balance in retained earnings represents
A) the amount of cash retained in the business.
B) a claim on specific assets of the corporation.
C) a claim on the aggregate assets of the corporation.
D) the amount of shareholders' equity exempted from the shareholders' claim on total assets.

Question

Quizplus · Accepted Answer

A credit balance in retained earnings represents a claim on the aggregate assets of the corporation. Retained earnings are part of shareholders' equity and reflect the accumulated net income of a company that has not been distributed to shareholders as dividends. This amount is considered a claim on the total assets of the corporation, rather than on specific assets or being an indication of cash retained in the business.

A Credit Balance in Retained Earnings Represents