Which of the Following Statements About Retained Earnings Is True

question 67

Multiple Choice

Which of the following statements about retained earnings is true?

• A)Retained earnings is the amount of cash that the company has retained since its inception.
• B)Retained earnings is the amount of creditors' claims on assets.
• C)Retained earnings is increased when treasury stock is reissued at a price greater than its cost.
• D)Retained earnings is decreased by cash dividends and stock dividends.

---

Definitions:

Machine-Hours

A measure of the amount of time machines are used in the production process, often related to allocating manufacturing overhead costs.

Manufacturing Overhead

All the costs related to manufacturing that are not direct materials or direct labor expenses.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead costs to products based on a planned level of activity or drivers, such as labor hours.

Total Job Cost

The total expenses associated with a specific job or project, including materials, labor, and overhead costs.