The Retained Earnings of a Corporation Is ________

question 47

Multiple Choice

The retained earnings of a corporation is ________.

• A) internally generated equity that is earned by profitable operations that is not distributed to stockholders
• B) externally generated equity that is contributed by shareholders
• C) externally generated equity that is acquired from banks and other creditors
• D) internally generated equity that is received from employee stock purchases

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Definitions:

Profit-Volume Chart

A graphical representation that shows the relationship between a company's profits and its volume of sales, illustrating the break-even point and profit levels at different sales volumes.

Cost-Volume-Profit Chart

A chart that graphically shows sales, costs, and the related profit or loss for various levels of units sold. Also called a break-even chart.

Sales Mix

The combination of different products or services that a company sells, impacting its overall profitability.

Operating Leverage

The degree to which a firm can increase operating income by increasing revenue, a measure of how sales growth translates to growth in operating income.