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 distributed more cash to its shareholders than it earned in that year. This results in decreased retained earnings as the dividends paid out are deducted from the earnings of the company. The cash balance may also decrease if the company had to dip into its reserves or borrow to pay out dividends.

What Is the Result If the Amount of Net Income