Retained earnings is:

Question

Quizplus · Accepted Answer

Retained earnings represent the portion of a company's net income that is kept by the company rather than distributed to shareholders as dividends. It is a component of owners' equity and accumulates over time as a result of profitable operations. Option A is incorrect as positive cash flows don't necessarily equal retained earnings. Option B is incorrect as net worth is a broader term that includes not only retained earnings but also other components like capital contributions and reserves. Option D is incorrect as retained earnings is a part of owners' equity and not equal to total assets.

Retained Earnings Is