For a new business,the beginning balance of retained earnings equals:
A)cash invested by the stockholders.
B)beginning balance of the common stock account.
C)zero.
D)budgeted net income for the first year.

Question

Quizplus · Accepted Answer

Retained earnings is the accumulated amount of net income earned and retained by the company. Since a new business does not have any prior net income or dividends paid, the beginning balance of retained earnings is zero.

For a New Business,the Beginning Balance of Retained Earnings Equals