alleryStart learning →Retained earnings equal total profits minus what?
AAll the operating expenses paid
BAll the income taxes paid
CAll the interest charges paid
DAll the dividends paid out
Answer & Solution
Correct answer: D. All the dividends paid out
1. Retained earnings are the amounts left over from profitable operations since the firm began.
2. They equal total profits minus all dividends paid to stockholders, dividends being distributions of profits.
3. Expenses, interest and taxes are already deducted in arriving at profit, so subtracting them again would double count.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 14 "Using Financial Information and Accounting", section 14.4 The Balance Sheet_
Keep practising Using Financial Information and Accounting
Browse all Using Financial Information and Accounting questions for US CMA Part 2, or explore more Financial Management topics.
Related questions
A bakery reports total liabilities of $70,150 and owners' equity of $78,750. What is its dCost of goods sold was $112,500, beginning inventory was $18,000 and ending inventory was How is the inventory turnover ratio calculated?What do activity ratios reflect?A bakery earned a net profit of $32,175 and has 10,000 shares of common stock outstanding.Earnings per share tells an investor what?A bakery earned a net profit of $32,175 and reports total owners' equity of $78,750. What Return on equity measures what?