The income statement of a corporation for the month ofNovember indicates a net i

Question

The income statement of a corporation for the month ofNovember indicates a net income of $200,000. During the sameperiod, $225,000 in cash dividends were paid. Would it be correct to say that the business incurred a netloss of $25,000 during the month? Why? The income statement of a corporation for the month ofNovember indicates a net income of $200,000. During the sameperiod, $225,000 in cash dividends were paid. Would it be correct to say that the business incurred a netloss of $25,000 during the month? Why?

Explanation / Answer

No, the business did not incur a loss because dividends are paidfrom retained earnings and not from net income.

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