Retained earnings is obtained by subtracting
A) any dividends to be paid for that year from net income.
B) net income from EBIT.
C) taxes from EBIT.
D) interest expense from EBIT.
E) EBIT from CGS.

Question

Quizplus · Accepted Answer

Retained earnings represent the portion of net income that a company chooses to keep and reinvest, rather than distribute as dividends. Therefore, retained earnings are calculated by subtracting any dividends paid out during a particular period from the net income earned during that same period.

Retained Earnings Is Obtained by Subtracting