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for question 13 of September 2016, I think that answer A and B mean the same thing. How does the word “directly” and “retained earnings” affect answer A? is the word “retained earnings” not the same like “profit or loss”? May you explain?
Profit and loss is the statement that relates to a particular period
When the results from all the years of the entity’s existence are combined, we arrive at the figure for Retained Earnings
So retained earnings are the aggregate accumulation of the profits achieved in all the years of that entity’s existence
The word ‘retained’ explains that those profits are the source of the dividend (and other) distributions to the shareholders so it’s only those profits AFTER the dividend distributions that are accumulated into the combined figure of Retained Earnings
And negative goodwill is credited to the profit or loss account at the earliest opportunity
From there it is accumulated into retained earnings … but it’s not credited DIRECTLY to retained earnings
Better?
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