أنشئ حسابًا أو سجّل الدخول للانضمام إلى مجتمعك المهني.
a. Net loss. b. Net income. c. Dividends. d. Investments by stockholders.
B. Net Income is the answer.
b. Net Income
Net income may be used to increase retained earnings.
Net income............................
The formula calculates retained earnings by adding net income to (or subtracting net losses from) beginning retained earnings and subtracting any dividends paid to shareholders. Hence, net income increase retained earnings.
net income
d) Investment by stockholder
Retained earnings is nothing but an accummulated wealth/ income kept aside by the business entity for future use. So the factor (as listed in the question) that increases the income of the business that would be the correct answer.
a. Net Loss = It reduces the income already earned by the business in previous years. Hence, a wrong answer.
b. Net Income = It adds up to the income already earned by the business in previous year. Hence, a correct answer.
c. Dividends = It again reduces the accumulated income of the business. Hence, a wrong answer.
d. Investments by stock holders = Nothing to do with income since its a liability for the business (i.e. share capital). Hence, a wrong answer.