The ending balance of Retained Earnings can best be described as:
A)The amount of cash received from stockholders over the life of the company.
B)The amount of net income over the life of the company not paid to owners in the form of dividends.
C)The amount of dividends paid over the life of the company.

Question

Quizplus · Accepted Answer

Retained Earnings is the portion of net income that a company chooses to keep rather than distribute as dividends to shareholders. Therefore, it represents the cumulative amount of earnings retained by the company over time. Option A is not correct because Retained Earnings does not include any cash received from stockholders. Option C is also not correct because it represents the portion of earnings that has been distributed to shareholders as dividends, not the amount retained by the company.

The Ending Balance of Retained Earnings Can Best Be Described