After adjusting journal entries are prepared and posted,but before closing journal entries are prepared and posted,the balance in retained earnings is equal to
A)zero.
B)the difference between total assets and total liabilities.
C)the amount that is to be reported in the current year's balance sheet.
D)the amount that was reported on the previous year's balance sheet.

Question

Quizplus · Accepted Answer

The balance in retained earnings is the amount that was reported on the previous year's balance sheet, as it is the accumulated profits and losses of the company since its inception. Adjusting journal entries are made to correct errors and ensure that the financial statements are accurate, but they do not affect the balance in retained earnings. Closing journal entries, on the other hand, transfer the net income or loss for the period to retained earnings, which will then be reported on the current year's balance sheet.

After Adjusting Journal Entries Are Prepared and Posted,but Before Closing