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Retained earnings is affected by each of the following except a cash dividend
Retained earnings is affected by each of the following except a
-
- cash dividend.
- large stock dividend.
- small stock dividend.
- stock split.
Expert Solution
Answer: d . stock split .
Stock split refers to the actions done by the corporate in which the organization divides the shares that are there in existence into the multiple shares in order to increase the liquidity of the shares. Retained earnings are the earning which is the part of the profit that is earned by the company. Retained earnings are the surplus amount that is left with the company after distributing the dividends to its shareholders. These are kept by the company as the reserve which will be used in the future if required by the company. The retained earnings are calculated by using the following formula:
Retained Earnings (RE) = Beginning RE + Net Income - Dividends
Hence, Option D is the correct answer.
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