Which of the Following Statements Is True About Retained Earnings

question 99

Multiple Choice

Which of the following statements is true about retained earnings?

• A)Retained earnings represents cash available to pay dividends to stockholders.
• B)Retained earnings cannot be restricted by loan covenants.
• C)Retained earnings generally consists of cumulative net income less any net losses and dividends since inception.
• D)Retained earnings is reduced by the par value of stock splits.

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Definitions:

NSF Check

A cheque that has been returned by the bank because the account on which it was drawn did not have sufficient funds, stands for Non-Sufficient Funds.

Bank Errors

Mistakes made by a bank in the processing of transactions, which can include errors in deposits, withdrawals, or charges that affect account balances.

Adjusting Entry

Journal entries made at the end of an accounting period to allocate revenues and expenses to the period in which they actually occurred.

NSF Check

A Non-Sufficient Funds (NSF) check is a check that cannot be processed because the account it is drawn on does not have enough funds.