The Purpose of a Statement of Retained Earnings Is To

question 100

Multiple Choice

The purpose of a statement of retained earnings is to:

• A) estimate the current value of a company's assets.
• B) report how the profits of a company have been distributed to stockholders or retained in the business.
• C) show where the money is flowing into and out of a company.
• D) explain the specific revenues and expenses arising during the period.

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Definitions:

Consumer Surplus

The difference between the total amount consumers are willing to pay for a good or service and the total amount they actually pay.

Producer Surplus

The difference between what producers are willing and able to sell a good for and the actual price they receive, representing the benefit to sellers.

Opportunity Cost

The expense incurred by not choosing the second-best option in any decision-making process.

Higher Prices

An increase in the cost of goods or services in the market.