Asked by Marlene Mejia on Jun 09, 2024
Verified
The Retained Earnings account is comprised of the cumulative earnings less dividends since the inception of the corporation.
Retained Earnings Account
An equity account that represents the accumulated portion of net income left over after dividends are paid to shareholders.
Cumulative Earnings
The total net income of a company since its inception, minus any dividends paid to shareholders.
Dividends
Distributions to shareholders from a company, typically originating from the profits earned by the corporation.
- Analyze the role and composition of retained earnings within a corporation.
Verified Answer
SM
Samin MagarJun 15, 2024
Final Answer :
True
Explanation :
This statement is true. The Retained Earnings account shows the cumulative profits of a company that have been kept within the business rather than paid out as dividends to shareholders. It represents the portion of earnings that has been retained for future growth and investment opportunities.
Learning Objectives
- Analyze the role and composition of retained earnings within a corporation.