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In a for-profit company, which of the following statements could be true?

6. In a for-profit company, which of the following statements could be true?

1. Profit reserves at the end of the year will be greater than the profits returned at the beginning of the year.
2. Profits kept at the end of the year will be greater than shareholders' shares.
3. The annual profit will be greater than the total profit.
4. Operating income will be less than annual income.

Answer: A) Profit reserves at the end of the year will be greater than the profits returned at the beginning of the year

Explanation:

At the end of each calculation period, the retained profits are reported on the balance sheet as revenue accumulated from the previous year (including current year earnings), excluding dividends paid to shareholders. In the next calculation cycle, the last RE balance from the previous accounting period will now be the first balance of earnings.