Which of the following increases the unappropriated retained earnings account?
Understand the Problem
The question asks which of the given options would increase the unappropriated retained earnings account. Retained earnings represent the accumulated profits of a company that have not been distributed as dividends. Understanding the impact of each option on retained earnings will lead to the correct answer.
Answer
Net income
Net income increases the unappropriated retained earnings account.
Answer for screen readers
Net income increases the unappropriated retained earnings account.
More Information
Unappropriated retained earnings increase when a company generates net income, as this represents the income that is not distributed to shareholders and is retained within the company for future use or investment.
Tips
A common mistake is to confuse net income with revenues before expenses. Ensure you account for all expenses and taxes to determine the correct net income.
Sources
- Retained Earnings Entries and Statements - Lumen Learning - courses.lumenlearning.com
- Which Transactions Affect Retained Earnings? - Investopedia - investopedia.com
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