Question

Lorna just finished compiling her company’s income statement for the month ended March 31. Her next step in preparing the company’s financial statements should be to A : subtract the company’s net income for March from the company’s retained earnings as of March 1. B : add the company’s net income for March to the company’s retained earnings as of March 1. C : subtract the company’s net income for March from the company’s retained earnings as of March 31. D : add the company’s net income for March to the company’s retained earnings as of March 31.

Answer 1

Answer:

Her next step in preparing the company’s financial statements should be to

D : add the company’s net income for March to the company’s retained earnings as of March 31.

Explanation:

The retained earnings are calculated by adding net income to (or subtracting net losses from) the previous term's retained earnings and then subtracting any net dividend(s) paid to the shareholders.