If the Retained Earnings Account Increases from the Beginning of the Year

question 202

Multiple Choice

If the retained earnings account increases from the beginning of the year to the end of the year, then

• A) net income is less than dividends.
• B) a net loss is less than dividends.
• C) the company must have sold stock.
• D) net income is greater than dividends.

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Definitions:

Vertical Analysis

A method of financial statement analysis in which each entry for each of the three major categories of accounts (assets, liabilities, and equity) is represented as a proportion of the total account.

Debt To Total Assets Ratio

A financial metric that indicates the percentage of a company's assets that are financed by debt.

Interest On Debt

The cost incurred by an entity for borrowing funds, which is paid as a fee over time to the lender.