Which of the following would retained earnings NOT be used for? A) to

QUESTION

Which of the following would retained earnings NOT be used for?

A) to invest in newer equipment
B) to pay dividends
C) to buy another company
D) to rebuild the plant
E) to pay off bank loans

ANSWER

Answer: B
Explanation: B) Retained earnings are net profits minus dividend payments made to shareholders. They are earnings retained by a firm for its own use—for buying more land or buildings, for instance.