Restrictions on retained earnings ________.

Question

Quizplus · Accepted Answer

Restrictions on retained earnings are usually reported in the notes to the financial statements. The Cash Flow Statement only shows the inflows and outflows of cash and cash equivalents, while the Income Statement only shows the revenues and expenses of the company. Restrictions on retained earnings refer to limitations on the use of profits that have been retained by the company instead of being distributed as dividends to shareholders. These restrictions may arise from legal requirements, debt agreements, or internal policies. They are disclosed in the notes to the financial statements as part of the accounting policies or significant accounting estimates.

Restrictions on Retained Earnings ________