If a Firm Has $1 000 000 in Retained Earnings

Multiple Choice

If a firm has $1 000 000 in retained earnings, what does this mean?

A) That the firm had $2 000 000 at the beginning of year but paid out $1 000 000 during the year in dividends
B) That the company is owed $1 000 000 by its creditors but has not yet collected the money
C) That the firm has $1 000 000 in the bank
D) That the company's net profits less its dividend payments equals $1 000 000
E) That the company has saved $1 000 000 during the period since the last balance sheet was made up