Question

Which of the following best describes retained earnings? Select one: Shows in and out flows of cash from the company during a period Provides a description of sources of funding and uses of funding, at a point in time Records level of reinvested profits Total assets less net liabilities equals equity

Answer 1

The option that best describes retained earnings is records level of reinvested profits.

What is retained earnings?

Retained earnings is the amount of a company's earnings that is not paid out to shareholders as dividends or used to pay debtors. It is the amount of money that can be reinvested into the business.

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