Identify the limitation of retained earnings ___________________.

It is an uncertain source of funds as the profits of business are fluctuating.

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It does not create any charge on the assets of the firm while providing funds.

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It is a convenient and continuous source of funds.

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It needs to promote the sales of an organisation.

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Solution

The correct option is C It is an uncertain source of funds as the profits of business are fluctuating.
Limitation of retained earnings:It is an uncertain source of funds as the profits of business are fluctuating. Retained earning refers to the accummulated net income of a company or a business organization.

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