Question

Retained earnings: Multiple Choice Is the cumulative net income (and loss) not distributed as dividends to its stockholders. Can only be appropriated by setting aside a cash fund. Represent an amount of cash available to pay shareholders. Are never adjusted for anything other than net income or dividends. Represents the amount shareholders are guaranteed to receive upon company liquidation.

Answer 1

Retained earnings refers to: A. the cumulative net income (and loss) not distributed as dividends to its stockholders.

Stockholder's equity can be defined as the amount of assets that are remaining or the residual interest of assets in a business after all liabilities have been settled or deducted.

In Financial accounting, stockholder's equity are primarily generated from two (2) main sources and these include;

• Capital invested by shareholders.

• Retained earnings.

Retained earnings are also referred to as accumulated earnings and it can be defined as the total amount of net income and loss that is held by a corporation for its future use, after paying out dividends to its stockholders. Thus, retained earnings are not distributed as dividends to a corporation's stockholders.

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