Retained earnings represent:a. Cash available for distribution to shareholdersb. Accumulated net income of the companyc. Shareholders' investments in the companyd. Amount owed to creditors
Question
Retained earnings represent:a. Cash available for distribution to shareholdersb. Accumulated net income of the companyc. Shareholders' investments in the companyd. Amount owed to creditors
Solution
Retained earnings represent the accumulated net income of the company. This is the portion of the profits that the company has decided to keep and reinvest in the business rather than distribute to shareholders as dividends. So, the correct answer is b. Accumulated net income of the company.
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