Question

In: Accounting

The major difference in the statement of retained earnings between a service business and a merchandising business is

The major difference in the statement of retained earnings between a service business and a merchandising business is

that the retained earnings statement of a merchandisi business shows the Cost of Goods Sold.

B) that the retained earnings statement of a merchandising business includes Dividends.

C) nothing. There are no differences between the two.

D) that the retained earnings statement of a service business includes Dividends.

Solutions

Expert Solution

The option (c) is right option.

 

Explanation:

Retained Earnings shows the statement of net profits after the dividends are paid to shareholders irrespective of the type of business. The difference between service and merchandise business howevers happens on the asset side and not the retained earnings side.

Hence, (c) is right option.

Hence, (c) is right option.

Umair answered 2 years ago
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