Tom and Lynn get together and start a mortgage brokerage business.They each contribute $25,000 of capital to the business.After the first year of operation,the total owners' equity is listed as $60,000.Most likely,the additional $10,000 of owners' equity is
A) common stock.
B) long-term liabilities.
C) current liabilities.
D) retained earnings.
E) a bank loan.

Question

Quizplus · Accepted Answer

Retained earnings represent the profits earned by a business that are kept within the business rather than distributed as dividends to shareholders. Therefore, it is the most likely additional owner's equity in this scenario.

Tom and Lynn Get Together and Start a Mortgage Brokerage