In the statement of cash flows, retained earnings are handled through the adjustment of ________.
A) "Revenue" and "Cost" accounts
B) "Current Assets" and "Current Liabilities" accounts
C) "Depreciation" and "Purchases" accounts
D) "Net Profits After Taxes" and "Dividends Paid" accounts

Question

Quizplus · Accepted Answer

Retained earnings are the portion of net profits that a company chooses to keep and not distribute to shareholders as dividends. Therefore, retained earnings are adjusted through the "Net Profits After Taxes" and "Dividends Paid" accounts in the statement of cash flows.

In the Statement of Cash Flows, Retained Earnings Are Handled