Which of the following would not affect the balance of the Retained Earnings account?
A)Stock split
B)Net loss
C)Cash dividend declared
D)Stock dividend declared

Question

Quizplus · Accepted Answer

A stock split does not affect the total amount of Retained Earnings. The number of shares increases, but the value per share decreases proportionally. This means that the overall value of the company remains the same, and hence the Retained Earnings balance does not change. On the other hand, B, C, and D directly affect the balance of Retained Earnings. A net loss reduces the balance, while cash and stock dividends decrease it by transferring funds to shareholders. A stock dividend does not affect the total value of Retained Earnings, but it changes its composition by converting a portion of it into additional shares.

Which of the Following Would Not Affect the Balance of the Retained