What is the result if the amount of Net Income for the year is less than the amount of the Dividends?
A)Retained Earnings increases
B)Cash balance decreases
C)Cash balance increases
D)Retained Earnings decreases

Question

Quizplus · Accepted Answer

If the amount of net income for the year is less than the amount of dividends, it means that the company has paid out more in dividends than it earned in profits. This results in a reduction in retained earnings, which is the amount of earnings that the company has kept to reinvest in the business. Therefore, the correct answer is D, Retained Earnings decreases.

What Is the Result If the Amount of Net Income