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23 April, 09:21

Retained Earnings represents the firm's cumulative earnings since inception, minus dividends and other adjustments. True False

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  1. 23 April, 11:47
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    True

    Explanation:

    Retained earnings refer to profits generated by a business but have not been distributed to the shareholders. Business owners or shareholders are entitled to share in the company's profits. The company directors may decide not to distribute all the earnings to the shareholders.

    Retained earning are recorded independently in the balance sheet as part of the shareholder's equity. The figure in the balance sheet shows the total amount of a company's retained earnings since inception. Retained earnings increase when a company makes profits and decreases when losses are reported. A company may reinvest the retained earnings in the business or use them for other purposes such as debts repayments.
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