A Company Which Has Been Trading for 4 Years Has

Multiple Choice

A company which has been trading for 4 years has made £10,000 in the last financial year and pays £8,000 in dividends.
The Statement of Financial Position shows the following:
Financed by:
Formula: $$\begin{array} { l r } \text { Ordinary } £ 1 \text { shares } & £ 20,000 \\\text { Retained Earnings } & £ 8,000 \\\text { Revaluation Reserve } & £ 12,000\end{array}$$
What is the meaning of "Retained Earnings"?

A) It is the £8,000 that is paid as dividends
B) It is the difference between the revaluation reserve and the shares
C) It is a pot of £8,000 cash that the company can use for finance
D) It is the profits made over the life of the company that were not paid out as dividends