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: \n\na. a decrease in cash of $13,000.\nb. an increase in cash of $13,000.\nc. the company had a net loss of $13,000.\nd. 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: \n\na. a decrease in cash of $13,000.\nb. an increase in cash of $13,000.\nc. the company had a net loss of $13,000.\nd. that the company had net income of $13,000.

Answer

Brief Explanations:

Retained Earnings is a stockholders' equity account. A credit balance indicates net income (as revenues increase retained earnings, which is a credit entry) and a debit balance indicates a net loss (as expenses decrease retained earnings, which is a debit entry). Since no dividends are declared, the debit balance in Retained Earnings after closing (when revenues and expenses are closed to Retained Earnings) directly reflects a net loss. Cash is not directly related to the Retained Earnings balance in this context as Retained Earnings is affected by revenues and expenses (not just cash - based transactions).

Answer:

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