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What are the retained earnings merits and demerits
Class 11

User Andreasg
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Answer:

Following are the merits and demerits of retained earning.

Step-by-step explanation:

Overall, retained earning has very few demerits compared to merits.

Merits: It helps to reduce the cost of external equity. It helps to eliminate the negative effects of under-pricing. It also helps to keep the same ownership structure.

Demerits: It is an improper way of utilising the remaining funds and it can be misused by the management.

User Elhef
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