Retained Earnings Reflect the Dividend Paying Ability of a Company

question 139

True/False

Retained earnings reflect the dividend paying ability of a company.

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Definitions:

Accounting Equation

The foundational principle of accounting that states assets equal liabilities plus equity.

Accounts Payable

Liabilities representing amounts owed by a company to creditors for purchases of goods and services on credit.

Limited Liability Company (LLC)

A business form consisting of one or more persons or entities filing an operating agreement with a state to conduct business with limited liability to the owners, yet treated as a partnership for tax purposes.

Separate Legal

Refers to a legal entity, such as a corporation, that is legally distinct from its owners.