The Primary Concern in Determining Whether Retained Earnings Is Correctly

question 77

Multiple Choice

The primary concern in determining whether retained earnings is correctly disclosed on the balance sheet is

• A) correct calculation of the net income or loss for the year.
• B) correct calculation of dividend payments for the year.
• C) whether prior-period adjustments have been made correctly.
• D) whether there are any restrictions on the payment of dividends.

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Definitions:

Insurance Payment

A payment made to an insurance company which provides compensation for loss, damage, illness, or death in return for payment of a specified premium.

Circular-Flow Model

A diagram that visualizes the economy as consisting of households and firms interacting in the goods and services markets, and labor markets, showing how money flows through the economy.

Resource Market

A market in which households sell and firms buy resources or the services of resources.

Product Market

A market in which products are sold by firms and bought by households.