If a Firm Has $1 000 000 in Retained Earnings

question 133

Short Answer

If a firm has $1 000 000 in retained earnings, what does this mean?
That the firm paid out $1 000 000 this year in dividends
That the company is owed $1 000 000 by its creditors but has not yet collected the money
That the firm has $1 000 000 in the bank
That the company's net profits less its dividend payments equals $1 000 000
That the company has saved $1 000 000 during the period since the last balance sheet was made up

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Definitions:

First Department

Typically the initial stage or department in a production process or sequence.

Equivalent Units

A metric used in cost accounting to express the amount of work done on partially completed units in terms of fully completed units.

Labor

Refers to the human effort, both physical and mental, used in the production of goods and services.

Overhead

Refers to the ongoing operational expenses not directly tied to the production of goods or services, such as rent, utilities, and administrative costs.