Retained Earnings

Q. The purpose of profit which is ploughed back is called dividend.

1. True
2. False

Q.

Retained earnings are called self-financing.

1. False

2. True

Q.

‘Ploughing back of profits’ is also known as ______________________.

1. Buying debentures

2. Issuing preference shares

3. Retaining earnings

4. Issuing equity shares

Q. ___sources of funds are those which are generated from within the business.

Q.

What are the two important sources from where the owner's funds can be obtained?

1. None of the above

2. Retained earnings and debentures

3. Retained earnings and issue of equity shares

4. Retained earnings and issue of preference shares

Q.

Retained earnings are based on the profits of an organization.

1. True

2. False

Q.

Retained earnings enhance the capacity of the business to absorb unexpected losses.

1. False

2. True

Q. Retained earning is an internal source of finance.

1. True
2. False

Q.

Retained earnings are

1. an indication of a company's liquidity

2. the same as cash in the bank

3. not important when determining dividends

4. the cumulative earnings of the company after dividends

Q. As the profits of business are fluctuating, ___ is an uncertain source of funds.