Which of the Following Mathematical Expressions Calculates a Firm's Retained

question 51

Multiple Choice

Which of the following mathematical expressions calculates a firm's retained earnings at the end of a year?

• A)Retained earnings = Beginning balance of retained earnings − Net income in the current year + Net loss in the previous year
• B)Retained earnings = Beginning balance of retained earnings + Net income in the current year + Dividends paid in the current year
• C)Retained earnings = Beginning balance of retained earnings + Net income in the current year − Dividends paid in the current year
• D)Retained earnings = Beginning balance of retained earnings − Net loss in the previous year − Dividends paid in the current year
• E)Retained earnings = Beginning balance of retained earnings − Net income in the current year + Dividends paid in the current year

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Definitions:

Title Passage

The point in time when the ownership (title) of goods passes from seller to buyer as per the terms of the sales contract.

Perpetual Inventory System

An accounting method that records goods transactions immediately through the use of computer systems, providing a continuous balance of inventory.

Cost Of Merchandise Sold

This is the total cost incurred to produce or acquire the goods sold by a company during a specific period.

Debit Balance

An account balance that occurs when the total amount of debits exceeds the total amount of credits in an account.