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:

Price Ceiling

A restriction enforced by the government on the highest price allowable for a product or service.

Price Floor

A legally established minimum price below which a good or service cannot be sold, often set to protect producers or farmers from too low prices.

Shortage

A market condition where the demand for a good or service exceeds the supply available at the existing price, resulting in scarcity.

Surplus

Occurs when the quantity of a good or service supplied exceeds the quantity demanded at a specific price, often leading to lower prices.