Which of the following correctly describes retained earnings?
A)It is the cumulative earnings of a company.
B)It represents the investments by stockholders in a company.
C)It equals total assets minus total liabilities.
D)It is the cumulative earnings of a company less dividends declared.

Question

Quizplus · Accepted Answer

Retained earnings refer to the amount of cumulative earnings that a company has accumulated over time, less any dividends that have been paid out to shareholders. Option A is close, but it doesn't account for the dividends that have been paid out. Options B and C are incorrect as they don't accurately describe retained earnings.

Which of the Following Correctly Describes Retained Earnings