20. If a company has a deficit in retained earnings: A. Then retained earnings h

Question

20. If a company has a deficit in retained earnings: A. Then retained earnings has a credit balance B. Then the corporations lifetime earnings exceed lifetime losses and dividends C. The deficit is subtracted to determine total stockholders equity on the balance sheet D. The deficit is added to determine total stockholders equity on the balance sheet 20. If a company has a deficit in retained earnings: A. Then retained earnings has a credit balance B. Then the corporations lifetime earnings exceed lifetime losses and dividends C. The deficit is subtracted to determine total stockholders equity on the balance sheet D. The deficit is added to determine total stockholders equity on the balance sheet A. Then retained earnings has a credit balance B. Then the corporations lifetime earnings exceed lifetime losses and dividends C. The deficit is subtracted to determine total stockholders equity on the balance sheet D. The deficit is added to determine total stockholders equity on the balance sheet

Explanation / Answer

C.The deficit is subracted to determine total stockholders equity on the balance sheet.

(retained earnings has debit balance when there is a deficit).

(corporations lifetime losses exceed it lifetime earnings when there is a deficit)

(deficit in retained earnings cannot be added, but has to be deducted from stock holders equity on balance sheet).

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