If the balance in Retained Earnings on January 1, 2013 was zero, then a credit balance in Retained Earnings on December 31, 2013 (after closing revenue and expense accounts) represents net income for the accounting period providing that no dividends were declared.

Question

Quizplus · Accepted Answer

A credit balance in Retained Earnings after closing revenue and expense accounts represents the net income for the accounting period, assuming no dividends were declared. This is because net income increases the Retained Earnings account, which has a normal credit balance. If the balance on January 1, 2013, was zero, then any credit balance in Retained Earnings on December 31, 2013, would represent the net income earned during that year.

If the Balance in Retained Earnings on January 1, 2013