Factors that usually affect retained earnings directly include:

Question

Quizplus · Accepted Answer

Retained earnings are affected by the company's net income or loss, which is the result of revenue and expenses during a reporting period. Dividends also directly affect retained earnings as they represent a portion of the company's net income that is distributed to shareholders, reducing the amount of earnings that are retained by the company.

B, C, and D may indirectly affect retained earnings, but they do not have a direct impact on the amount of earnings that are retained by the company. For example, restructuring charges may result in lower net income, which will ultimately affect retained earnings, but the charges themselves do not directly affect the retained earnings account.

Factors That Usually Affect Retained Earnings Directly Include