Question

Retained earnings:

1.Generally consists of a company's cumulative net income less any net losses and dividends declared since its inception.
2.Represent an amount of cash available to pay shareholders.
3.Are never adjusted for anything other than net income or dividends.
4.Represents the amount shareholders are guaranteed to receive upon company liquidation.
5.Can only be appropriated by setting aside a cash fund.

Answer 1

1.Generally consists of a company's cumulative net income less any net losses and dividends declared since its inception.

Step-by-step explanation:

Retained earnings is an element of the balance sheet that represents the accumulated net income and losses and the amount paid to the shareholders over the years as dividend.

Each year, the company's net income or loss from the statement of profit or loss is posted into the retained earnings account.

It is an integral part of the owners equity along with ordinary share capital.

As such, retained earnings generally consists of a company's cumulative net income less any net losses and dividends declared since its inception.