Which of the following actions will reduce retained earnings in the balance sheet?

A) A decision to not pay a dividend even though earnings are stable
B) A stock split
C) A reverse stock split
D) A stock dividend

Retained Earnings

The portion of net income not distributed to shareholders but retained by the company to reinvest in its core business or to pay off debt.

Stock Dividend

A payment made to shareholders in the form of additional shares rather than cash, often based on a predetermined ratio to existing ownership.

Balance Sheet

A summary document that outlines a firm's liabilities, assets, and equity held by shareholders at a particular moment.