Question

Its retained earnings is the actual cash that the firm has generated through operations less the cash that has been paid out to stockholders as dividends. If the firm has sufficient retained earnings, it can purchase assets and pay for them with cash from retained earnings. True False

Answer 1

Answer:

FALSE.

Explanation:

Retained earnings are the percentage of a corporation's profits that have not been allocated to shareholders; alternatively, they are retained for holdings in working capital and/or intangible assets, as well as for paying down any exceptional liabilities.

An organization's retained earnings are the organization's accrued total income that the company retains at a point in time, as well as at the close of the current period.