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WAEC Financial Accounting 1995 Question 16

Question 16

Company Accounts

The undistributed profits of a limited liability company is

  1. A.goodwill
  2. B.working capital
  3. C.net profit
  4. D.retained earnings
  5. E.net loss.
Show the answer and explanation

Answer: D (retained earnings)

Explanation

Profits kept in the company instead of paid as dividends are retained earnings.