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. that the company had net income of $13,000. b. the company had a net loss of $13,000. c. a decrease in cash of $13,000. d. an increase in cash 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. that the company had net income of $13,000. b. the company had a net loss of $13,000. c. a decrease in cash of $13,000. d. an increase in cash of $13,000.

Answer

Explanation:

Step1: Understand Retained Earnings

Retained Earnings is increased by net income and decreased by net loss. A debit balance in Retained Earnings means a decrease.

Step2: Analyze the situation

Since the beginning balance of Retained Earnings is zero and there are no dividends, a debit balance of $13,000 indicates a net loss of $13,000. Net income would result in a credit balance in Retained Earnings. Also, the balance in Retained Earnings is not directly related to the change in cash.

Answer:

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