All of the Following Statements Regarding Retained Earnings Are True

question 196

Multiple Choice

All of the following statements regarding retained earnings are true except

• A) retained earnings represents a claim on cash.
• B) a debit balance in Retained Earnings indicates a deficit.
• C) some companies may restrict availability of retained earnings for dividends.
• D) retained earnings is net income that a company retains in a business.

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Definitions:

Implied Authority

A form of authority of an agent that is not explicitly stated but is assumed to be granted as part of the agent's duties.

Winding Up

The process of closing down a company by settling its liabilities and distributing any remaining assets to its shareholders.

Converting Assets

The process of changing assets from one form to another, often from non-liquid assets into cash or cash equivalents.

Confession Of Judgment

A legal agreement in which a debtor consents to a judgment against them, allowing the creditor to obtain a judgment without undergoing the standard court process.