All of the following are true of retained earnings except:
A) They are the difference between paid-in capital and the total dividends paid.
B) They represent the amount of new capital shareholders have indirectly contributed.
C) They are equal to the cumulative earnings less dividends.
D) They are the amount of earnings plowed back into the firm.

Question

Quizplus · Accepted Answer

Retained earnings are not the difference between paid-in capital and total dividends paid; they are the cumulative earnings of a company minus any dividends paid out to shareholders.

All of the Following Are True of Retained Earnings Except