PDA

View Full Version : Retained earings


purplejewels
Sep 27, 2009, 05:23 PM
Which of the following must be added to beginning Retained Earnings to compute ending Retained Earnings?
Net income
Expenses
Dividends
All of these answers are correct.

I am thinking it is net income but need to be sure thanks for your help

morgaine300
Sep 27, 2009, 06:24 PM
That's correct. Revenues increase retained earnings, expenses decrease it, and dividends decrease it. That eliminates expenses and dividends.

Since net income is the amount by which revenues are bigger than expenses, then that is an increase.