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2 October, 01:54

All of the following statements regarding retained earnings are true exceptA. retained earnings represents a claim on cash. B. a debit balance in Retained Earnings indicates a deficit. C. retained earnings is net income that a company retains in a business. D. some companies may restrict availability of retained earnings for dividends.

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  1. 2 October, 02:20
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    A) retained earnings represents a claim on cash.

    Explanation:

    Retained earnings are the accumulated profits that a company keeps that are left after dividends are paid. Retained earnings are the equivalent of a savings account for an individual. Retained earnings are shown in the balance sheet as part of owners' equity.

    For example, corporation A had a net profit of $10 million during last year, and it paid dividends for a total of $4 million, its retained earnings for last year are $6 million.

    Companies use retained earnings as money available for financing new or existing projects.
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