To Compute the Ending Balance of Retained Earnings

question 154

Multiple Choice

To compute the ending balance of Retained Earnings:

• A)the beginning balance in Retained Earnings will be negative for a new business.
• B)net loss for the period is subtracted from the beginning balance of Retained Earnings.
• C)Dividends are added to the beginning balance of Retained Earnings.
• D)common stock sold during the period is added to the beginning balance of Retained Earnings.

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Definitions:

Value In Use

The current worth of the anticipated future cash flows from an asset or a unit that generates cash.

Future Cash Flows

Estimated monetary gains or losses that will be realized by an entity in the future.

Discount Rate

The interest rate used in discounted cash flow analysis to determine the present value of future cash flows.

Cash-Generating Unit

The minimal distinguishable collection of assets that creates cash inflows primarily independent from the cash inflows of other assets or asset collections.