Indicate Whether Each of the Following Statements About Retained Earnings

question 35

Short Answer

Indicate whether each of the following statements about retained earnings is true or false.
_______ a)A dividend paid to stockholders decreases retained earnings.
_______ b)Issuing common stock for cash increases retained earnings.
_______ c)The amount of net income for a period must equal retained earnings.
_______ d)The purchase of a truck decreases retained earnings.
_______ e)The amount of net income for a period increases retained earnings.

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Definitions:

Cost of Equity

The return a company theoretically pays to its equity investors, i.e., shareholders, to compensate for the risk they undertake by investing their capital.

Acquisition

The process of acquiring control of another company by purchasing its shares or assets.

Cash Flows

The total amount of money being transferred into and out of a business, particularly affecting its liquidity.

Shares Outstanding

The total number of shares of a corporation's stock that are currently owned by all its shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders.