Which One of the Following Equations Represents Retained Earnings Activity

question 43

Multiple Choice

Which one of the following equations represents retained earnings activity?

• A) Beginning balance + net income + dividends = profits for the year
• B) Beginning balance + cash inflows - cash outflows = ending balance
• C) Beginning balance + dividends - net income = ending balance
• D) Beginning balance + net income - dividends = ending balance

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Definitions:

Units-of-production Method

A method of depreciation that allocates the cost of an asset based on its usage, production, or units of activity rather than the passage of time.

Passage of Time

Refers to the progression of time and its implications, often related to depreciation, amortization, and other time-sensitive accounting practices.

Ignores Salvage Value

This term refers to the accounting practice where the potential residual value of an asset at the end of its useful life is not considered in depreciation calculations.