PRC-3 · Chapter 4 · Question 32 of 65
At the end of a profitable year, a company's board decides not to pay any dividends and instead uses all the profits to buy new machinery. Which internal source of finance is being utilized?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Retained earnings
Explanation
Retained earnings refer to the portion of net income that is kept by the corporation rather than distributed to shareholders as dividends.
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