객관식
Which of the following items are components of shareholders' equity on a corporation's balance sheet?
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12. Stockholders' Equity
Retained Earnings
객관식
Which term describes profits generated from operations that have been reinvested into the business rather than distributed to shareholders?
A
Paid-in Capital
B
Dividends Payable
C
Retained Earnings
D
Accumulated Depreciation
검증된 단계별 안내1
Understand the concept of Retained Earnings: Retained Earnings represent the portion of a company's profits that are reinvested into the business rather than distributed to shareholders as dividends. It is a key component of equity on the balance sheet.
Differentiate Retained Earnings from Paid-in Capital: Paid-in Capital refers to the funds raised by the company from shareholders in exchange for shares of stock, not profits generated from operations.
Differentiate Retained Earnings from Dividends Payable: Dividends Payable are liabilities representing the amount of dividends declared but not yet paid to shareholders, whereas Retained Earnings are reinvested profits.
Differentiate Retained Earnings from Accumulated Depreciation: Accumulated Depreciation is a contra-asset account that tracks the total depreciation of fixed assets over time, unrelated to profits or equity.
Conclude that Retained Earnings is the correct term: Based on the definitions and comparisons, Retained Earnings accurately describe profits reinvested into the business rather than distributed to shareholders.
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