Retained earnings represent the cumulative total of all earnings, net of dividends, that have been retained and reinvested in the firm since its inception.

Question

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Retained earnings are the accumulated profits that a company keeps and reinvests in the business, rather than distributing them as dividends to shareholders. It represents the portion of a company's net income that is not paid out as dividends but is instead retained for reinvestment in the business or used to pay off debt. The cumulative total of all earnings, net of dividends, that have been retained and reinvested in the firm since its inception represents retained earnings.

Retained Earnings Represent the Cumulative Total of All Earnings, Net