Retained earnings represents

Question

Quizplus · Accepted Answer

Retained earnings represent the portion of a company's net income that is not distributed to shareholders as dividends but is instead kept for reinvestment in the business. Therefore, option C is the correct choice. Option A is not entirely accurate, as retained earnings do not necessarily represent a pool of cash that can be readily used by the firm. Option B is incorrect, as retained earnings do not affect the market value of the firm's equity securities issued. Option D is also incorrect, as retained earnings are the amount of earnings that are not distributed as dividends, rather than the cumulative amount of cash paid out in dividends.

Retained Earnings Represents