The retained earnings account on the balance sheet does not represent cash.Rather, it represents part of stockholders' claims against the firm's existing assets.This implies that retained earnings are in fact stockholders' reinvested earnings.

Question

Quizplus · Accepted Answer

Retained earnings are not cash, but rather represent the portion of a company's earnings that have been kept by the company and reinvested in the business, thus increasing the value of the shareholders' equity in the company.

The Retained Earnings Account on the Balance Sheet Does Not