Multiple Select QuestionSelect all that applyAccumulated Deficit ______. (Check all that apply.)Multiple select question.indicates that no dividends have been declaredindicates accumulated net lossesmeans that Retained earnings has a debit balancemeans that Retained earnings has a credit balanceis shown in parentheses on the balance sheet
Question
Multiple Select QuestionSelect all that applyAccumulated Deficit ______. (Check all that apply.)Multiple select question.indicates that no dividends have been declaredindicates accumulated net lossesmeans that Retained earnings has a debit balancemeans that Retained earnings has a credit balanceis shown in parentheses on the balance sheet
Solution
The correct answers are:
- Indicates accumulated net losses
- Means that Retained earnings has a debit balance
- Is shown in parentheses on the balance sheet
Explanation:
Accumulated Deficit refers to the sum of all the net losses a company has experienced since it started its operations. It is reflected as a debit balance in the Retained Earnings account. On the balance sheet, it is shown in parentheses to indicate a negative balance. It does not necessarily mean that no dividends have been declared, as a company can still declare dividends even if it has an accumulated deficit. Also, it does not mean that Retained earnings has a credit balance, as a credit balance in Retained Earnings would indicate accumulated net income, not losses.
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