Question

Which of the following transactions decrease the statement of retained earnings?

Answer 1

The statement of retained earnings typically reflects changes in a company's retained earnings over a period of time, mainly influenced by net income or loss and dividend distributions. Here are some transactions that can decrease the statement of retained earnings:

1. **Net Loss**: If a company incurs a net loss for the period, it directly decreases retained earnings.

2. **Dividends Declared and Paid**: When a company declares and pays dividends to its shareholders, it reduces retained earnings.

3. **Prior Period Adjustments**: If adjustments are made to prior periods resulting in a decrease in previously reported retained earnings, this would also lower the current retained earnings.

4. **Write-offs**: Significant write-offs of assets or expenses considered extraordinary or one-time can diminish retained earnings.

5. **Stock Repurchases**: While not directly affecting retained earnings, repurchasing stocks can indirectly lead to a decrease in retained earnings due to cash outflows.

If you have a specific list of transactions in mind, please provide them, and I can assess which ones would decrease retained earnings.