If the retained earnings account decreases from the beginning of the year to the end of the year, then?
(a) net income is less than dividends
(b) there was a net income and no dividends
(c) additional investments are less than net losses
(d) net income is greater than dividends

(A) net income is less than dividends

Explanation:

We know that

The ending balance of retained earning = Beginning balance of retained earnings + net income - dividend paid

Since the beginning balance of the retained earning is more than the ending balance of the retained earning which represents that the dividend amount is more than the net income

Therefore, the most appropriate option is a.

answer a is correct answer

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