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27 August, 09:01

Which of the following will have the effect of decreasing retained earnings? a. A net loss for the year b. Declaration of a cash dividend or Declaration of a 5% stock dividend or Declaration of a property dividend c. Resale of treasury stock for less than book value assuming no previous treasury stock sales. d. All of these will decrease retained earnings e. None of these will decrease retained earnings

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  1. 27 August, 09:08
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    d. All of these will decrease retained earnings

    Explanation:

    As we know that

    The ending balance of retained earning = Beginning balance of retained earnings + net income - dividend paid

    The net income increase the balance of retained earnings while the net loss and dividend reduces the retained earning balance

    So, the effect of decrease in retained earning can be through net loss, dividend with respect to cash, stock, property, etc, plus resale of treasury stock which is less than the book value

    Therefore, D option is correct
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Home » Business » Which of the following will have the effect of decreasing retained earnings? a. A net loss for the year b. Declaration of a cash dividend or Declaration of a 5% stock dividend or Declaration of a property dividend c.
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