Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 34 - No. 5)
What is the role of 'Retained Earnings' in the Statement of Financial Position?
A liability representing profits distributed to shareholders.
A component of equity representing accumulated profits.
An asset representing the company's cash reserves.
A component of expenses.
Explanation
Retained earnings is the cumulative profit that a company has earned over time that has not been distributed to shareholders (e.g. as dividends).
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