What is the net 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 paid out more cash in dividends than it earned in profits. This would result in a decrease in the Retained Earnings account, as the company has distributed more profits to shareholders than it has retained for reinvestment into the business. The Cash balance may also decrease if the company had to dip into its reserves or take on debt to pay the dividends.

What Is the Net Result If the Amount of Net