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?
- A$350 million
- B$460 million
- C$440 million✓ Correct answer
- 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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