Retained earnings
A) is the same as contributed capital
B) must be restricted by law
C) changes are summarized in the retained earnings statement
D) is equal to cash on hand

Question

Quizplus · Accepted Answer

Retained earnings represent the portion of a company's profits that are not distributed to shareholders as dividends, but rather are retained for future use by the business. Retained earnings changes are summarized in the retained earnings statement, which shows the beginning balance, any adjustments, net income or loss, and dividends paid during the period, as well as the ending balance. Retained earnings are not the same as contributed capital (A), which represents the funds that investors contribute to a company when they purchase stock. There are no legal requirements for how companies must manage or restrict their retained earnings (B), as long as they comply with relevant accounting and tax regulations. Retained earnings are also not necessarily equal to cash on hand (D), which reflects the amount of actual cash that a company has available at a given time.  So, option C is the correct answer.

Retained Earnings