As the year draws to a close, your boss has asked the team to consider possibilities for the company's retained earnings. Which of the following is the best option for ongoing operations of the company regarding retained earnings?

At the end of each fiscal year, net income is closed out to retained earnings, all revenue and expense accounts are reset to zero, and the difference between the two is credited to retained earnings for net income or debited for a net loss.

Retained earnings can be used to fund the future operations of the company.

Retained earnings can be used to fund the bad debt of the company.

Retained earnings are the total net income or loss that a privately held company has accumulated over the years.