The Major Types of Transactions That Affect Retained Earnings Are

question 7

Multiple Choice

The major types of transactions that affect retained earnings are:

• A)paid-in capital and common stock.
• B)assets and liabilities.
• C)revenues,expenses,and dividends.
• D)revenues and liabilities.

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Definitions:

Common Share

A type of equity ownership in a corporation, representing a fraction of the total ownership, where each share entitles the holder to a vote at company meetings and a share in the company’s profits.

Acid-Test Ratio

A liquidity ratio measuring a company's ability to meet its short-term obligations with its most liquid assets, excluding inventory.

Balance Sheet

A report that encapsulates a business's assets, debts, and owner's equity at a certain date.

Financial Leverage

The use of borrowed funds with a fixed cost in an effort to amplify the potential return to shareholders.