Which of the Following Statements About Retained Earnings Is Correct

question 192

Multiple Choice

Which of the following statements about Retained Earnings is correct?

• A)Retained Earnings represents cash available to pay dividends to stockholders.
• B)Retained Earnings cannot be restricted by loan covenants.
• C)Retained Earnings generally consists of cumulative net income less any net losses and dividends since inception.
• D)Retained Earnings is reduced by the par value of the common stock that is issued.

Identify how differences in productivity and resources contribute to variations in standards of living.

Evaluate how economists assess economic progress.

Understand the role and examples of different factors of production in the economy.

Grasp the concept of diminishing returns and its implications for economic growth.

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Definitions:

Wage Base Limits

The maximum amount of income that is subject to social security or other payroll taxes within a tax year.

Payroll Tax Expense

The employer’s expense associated with the employment taxes (Social Security, Medicare, and unemployment taxes) on the wages paid to employees.

Federal Unemployment Taxes

Taxes paid by employers based on employee wages/salaries to fund unemployment compensation to workers who have lost their jobs.

Medical Insurance

Health care insurance for which premiums may be paid through a deduction from an employee’s paycheck.