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14 September, 10:19

Which of the following best describes retained earnings? Multiple Choice The amount initially invested in the business by stockholders. Cash available for expansion and growth. Income that has been reinvested in the business rather than distributed as dividends to stockholders. Cash available for dividends.

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  1. 14 September, 10:24
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    The correct answer is letter "C": Income that has been reinvested in the business rather than distributed as dividends to stockholders.

    Explanation:

    Retained earnings are the part of the company's net profits which does not pay out as dividends to shareholders. This money is retained by the corporation and reinvested in the business, or used to pay off a portion of its debt.

    Retained earnings appear on the Balance Sheet under shareholder's equity. Retained Earnings can be also reported in a separate statement called the Statement of Retained Earnings.
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