Harvey, a shareholder in Braxwell Technologies, reinvests 10% of the dividends received from the company back into it, partly to evade taxes and partly to support the company. This scenario reflects the concept of _____.
A) cash disbursements
B) tunneling
C) retained earnings
D) asset stripping

Question

Quizplus · Accepted Answer

Retained earnings refer to the portion of a company's earnings that are not distributed as dividends to shareholders but are instead reinvested back into the company. In this scenario, Harvey is reinvesting 10% of the dividends he receives back into Braxwell Technologies, which is an example of retained earnings.

Harvey, a Shareholder in Braxwell Technologies, Reinvests 10% of the Dividends