Which One of the Following Equations Represents the Statement of Retained

question 65

Multiple Choice

Which one of the following equations represents the statement of retained earnings activity?

• A) Beginning retained earnings + net income + dividends = ending retained earnings
• B) Beginning retained earnings + cash inflows - cash outflows = ending retained earnings
• C) Beginning retained earnings + dividends - net income = ending retained earnings
• D) Beginning retained earnings + net income - dividends = ending retained earnings

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Definitions:

Net Credit Sales

The total value of sales made on credit minus any returns or allowances, indicating the actual revenue generated from credit transactions.

Allowance Method

An accounting technique used to adjust accounts receivable for debts that are expected not to be collected.

Uncollectible Receivables

Accounts receivable that are considered irrecoverable and unlikely to be collected, leading to their removal from the accounts.

Allowance for Doubtful Accounts

An estimate of the amount of credit sales that are expected not to be collected.