assume the balance in the retained earnings account at january 1, 2025 is zero, and no dividends are…

assume the balance in the retained earnings account at january 1, 2025 is zero, and no dividends are declared in 2025. if a debit balance of $13,000 exists in retained earnings after closing out revenues and expenses at the end of 2025, this indicates: a. the company had a net loss of $13,000. b. a decrease in cash of $13,000. c. an increase in cash of $13,000. d. that the company had net income of $13,000.

assume the balance in the retained earnings account at january 1, 2025 is zero, and no dividends are declared in 2025. if a debit balance of $13,000 exists in retained earnings after closing out revenues and expenses at the end of 2025, this indicates: a. the company had a net loss of $13,000. b. a decrease in cash of $13,000. c. an increase in cash of $13,000. d. that the company had net income of $13,000.

Answer

Brief Explanations:

Retained Earnings is increased by net income (credit balance) and decreased by net loss (debit balance). Since there is a debit balance of $13,000 in Retained Earnings after closing (and no dividends), it means expenses exceeded revenues, resulting in a net loss. Cash is not directly related to this Retained Earnings balance (as it's about revenue/expense relationship, not cash flow).

Answer:

A. the company had a net loss of $13,000.