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Series 79: Collection, Analysis & Evaluation of Data
Series 79 practice questionmediumRetained Earnings Calculation

A company started the year with $400 million in retained earnings. During the year, it reported $50 million in net income and paid $10 million in dividends. What is the ending retained earnings balance?

  1. A$350 million
  2. B$460 million
  3. C$440 million✓ Correct answer
  4. D$400 million
Explanation

Why C$440 million

Retained earnings = Beginning balance + Net income - Dividends = $400m + $50m - $10m = $440m. $460m ignores dividends; $350m is calculated incorrectly.

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