Retained earnings at the beginning of the year are Rs. 250,000. The business earns profit of Rs. 90,000 and declares dividends of Rs. 35,000. What are closing retained earnings?
Correct answer: A. Rs. 305,000
- A. Rs. 305,000
- B. Rs. 215,000
- C. Rs. 375,000
- D. Rs. 395,000
Explanation
Closing retained earnings equal opening retained earnings plus profit less dividends. Thus, Rs. 250,000 plus Rs. 90,000 minus Rs. 35,000 equals Rs. 305,000.
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About Financial Statements
Financial statements present a business's financial performance and position through the income statement, statement of financial position, cash flow statement and changes in equity. Questions involve preparing and interpreting these statements, adjusting entries, depreciation, closing inventory, accrued and prepaid items, and distinguishing profit from cash flow.
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