Which one of the following equations represents retained earnings activity?
A)Beginning Balance + Net Income + Dividends = Profits for the Year
B)Beginning Balance + Cash Inflows - Cash Outflows = Ending Balance
C)Beginning Balance + Dividends - Net Income = Ending Balance
D)Beginning Balance + Net Income - Dividends = Ending Balance

Question

Quizplus · Accepted Answer

Retained earnings activity is the change in the accumulated profits or losses of a company over a certain period of time. The formula for retained earnings activity is Beginning Balance + Net Income - Dividends = Ending Balance. This means that the beginning balance of retained earnings is added to the net income of the period and then dividends paid to shareholders are subtracted from the total to arrive at the ending balance of retained earnings. Option D represents this formula, making it the correct choice.

Which One of the Following Equations Represents Retained Earnings Activity