If retained earnings decreased during the year, and no dividends were paid, which of the following statements must be true?
A)Expenses for the year exceeded revenues.
B)The company did not have enough cash to pay its expenses.
C)Total stockholders' equity decreased
D)Liabilities increased during the year.

Question

Quizplus · Accepted Answer

If retained earnings decreased and no dividends were paid, it indicates that the company had a net loss, meaning expenses exceeded revenues.

If Retained Earnings Decreased During the Year, and No Dividends