Which of the Following Is True of Retained Earnings

question 147

Multiple Choice

Which of the following is true of retained earnings?

• A) Retained earnings decrease with payment of dividends.
• B) Retained earnings increase with purchase of assets.
• C) Retained earnings decrease with collection of revenue.
• D) Retained earnings increase with payment on account.

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Definitions:

Special Order

A one-time or unusual order for goods or services, often requiring unique production or procurement efforts.

Sales Commissions

Payments made to sales personnel based on the amount of sales they generate, often a percentage of the sales value.

Fixed Manufacturing Expenses

Costs associated with production that do not change with the level of manufacturing output, such as salaries of managerial staff or rent of the production facility.

Fixed Selling

A category of expenses that do not vary with the level of production or sales, such as salaries of sales personnel and advertising costs.