Question

On the equity portion of the balance sheet are retained earnings, which are earnings: that include any cash dividends paid out. left to distribute to shareholders. that include any dividend payments made. left after cash dividends have been paid out.

Answer 1

The retained earnings on the equity portion of the balance sheet are earnings left to distribute to shareholders.

What are Retained Earnings?

The formula for obtaining the retained earnings for the current period is the beginning retained earnings plus net income less dividends paid. It can be defined as the accumulated net income that is not distributed yet to stockholders.

Thus, the retained earnings are not the cash dividends paid out, do not include dividend payments made, and are not left-overs only after cash dividends have been paid out.

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