The balance in retained earnings equals all net income, less all dividends, since the company began operations.Group startsTrue or False

Statement Analysis

1. Statement: "The balance in retained earnings equals all net income, less all dividends, since the company began operations."
2. Interpretation: This statement implies that the retained earnings account reflects the cumulative net income of the company after subtracting all dividends paid out to shareholders over the life of the company.

Relevant Concepts

1. Retained Earnings: This is a portion of the company's profits that is held back in the company, rather than being distributed to shareholders as dividends.
2. Calculation of Retained Earnings: The formula for calculating retained earnings is: $\text{Retained Earnings} = \text{Beginning Retained Earnings} + \text{Net Income} - \text{Dividends}$

Conclusion

The statement is True. The balance in retained earnings accurately reflects the cumulative net income achieved by the company, minus any dividends paid to shareholders since the company began operations. This aligns with accounting principles regarding the accumulation of retained earnings over time.