the balance in retained earnings at the end of the year is determined by retained earnings...

the balance in retained earnings at the end of the year is determined by retained earnings balance at the ''beginning of the year:

a. plus revenues, minus liabilities

b. plus net income, minus dividends

c. plus assets, minus liabilities

d. plus accounts, minus deferrals

Solutions

Expert Solution

b. plus net income, minus dividends

Retained earnings is the accumulated profit balance. So retained earnings Year end balance is arrived by adding net profit for the year and by deducting dividends paid for the year. Net income is added because to increase accumulated profit balance. Dividend is the distribution of profits earned, so when dividend is paid it is paid out of accumulated profit balance. So, to reduce accumulated profit balance it is deducted.

Option A is not correct because revenues cannot be added directly without deducting expense. On the other hand liabilities can't be dealt in accumulated profit.

Option c is also not correct assets and liabilities are not income or pay distribution of income.

Option d is not correct because accounts and deferrals do not form part of accumulated earnings

ekkarill92 answered 1 year ago

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