Which One of the Following Equations Represents Retained Earnings Activity

question 43

Multiple Choice

Which one of the following equations represents retained earnings activity?

• A) Beginning balance + net income + dividends = profits for the year
• B) Beginning balance + cash inflows - cash outflows = ending balance
• C) Beginning balance + dividends - net income = ending balance
• D) Beginning balance + net income - dividends = ending balance

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Definitions:

General Rule

A basic or principal rule that provides guidance or policy in a given area or operation.

Transfer Price

The price at which goods and services are transferred between departments or subsidiaries of the same company.

Variable Cost

Costs that vary directly with the level of production or sales volume, such as raw materials or direct labor.

General Transfer-Pricing Formula

A method or set of guidelines used to determine the price at which goods and services are transferred between departments or divisions within the same company.