Which of the Following Statements Is True

question 112

Multiple Choice

Which of the following statements is true?

• A) Retained earnings is an asset.
• B) Retained earnings represents the future dividend liability of the company.
• C) Retained earnings has a debit balance for a successful corporation.
• D) Retained earnings represents the profit that has been earned by the company, less any dividends declared since the first day of operations.

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Definitions:

Balance Sheet

A financial statement that shows a company's assets, liabilities, and shareholders' equity at a specific point in time, providing a snapshot of the firm's financial condition.

Sales On Account

Sales made to customers for which payment is to be made in the future.

Cost Of Goods Sold

The direct expenses related to the manufacturing of products sold by a company, encompassing both materials and labor costs.

Accounts Receivable Turnover

A financial ratio that measures how efficiently a company collects revenue from credit sales by comparing net credit sales with the average accounts receivable.