Question

Profit for the period (assuming that none of it is distributed as dividends) usually ends up in which account?
a) Capital portion of equity account.
b) Current asset account.
c) Non-current asset account.
d) Reserved portion of the equity account.
e) Current liability account

Answer 1

Answer:

C. Non - current asset account.

Answer 2

It ends up in the capital portion of the equity account

Explanation:

• The profit for the current financial period which has not been distributed as a dividend to its shareholders is referred to as retained earnings.

• Retained earnings are done to finance the future projects of the organization or for the growth prospects of the organization.

• Hence it is a kind of internal source of fund and therefore comes under the capital portion of the equity account.