Asked by Lainey Erdmann on Jun 25, 2024
Verified
A negative balance in retained earnings is called a deficit.
Retained Earnings
Funds that a company has decided to keep for reinvestment or other purposes instead of distributing as dividends.
Deficit
A financial situation where expenses exceed revenues, resulting in a negative balance.
- Comprehend the idea of assets, liabilities, and shareholders' equity, and their importance within the field of accounting.
Verified Answer
DE
Domonique EvansJun 30, 2024
Final Answer :
True
Explanation :
A negative balance in retained earnings is indeed referred to as a deficit, indicating that a company has incurred more losses or distributed more dividends than it has earned in profits over time.
Learning Objectives
- Comprehend the idea of assets, liabilities, and shareholders' equity, and their importance within the field of accounting.