Question

Cynthia has been asked by her superior to calculate the total shareholder’s equity. Which balance will she add to the opening equity to find the closing balance of the shareholder’s equity?

A.
retained earnings
B.
salaries payable
C.
supplies
D.
inventory
E.
cash at bank

Answer 1

A. retained earnings

Step-by-step explanation:

Retained earnings are part of a company's profits that have not been distributed to shareholders as dividends. It means that retained earnings belong to shareholders only that they have not been shared with them. Businesses use retained earnings to further investments into the business.

Retained earnings are added to the opening balance of equity to determine the balance of shareholders' equity. They are added because they belong to shareholders.