The net income that firm earns can either be paid out to shareholders as as ____.

Question

Quizplus · Accepted Answer

Net income can either be distributed to shareholders in the form of dividends or retained by the company as retained earnings for reinvestment in the business. Dividends come from the company's profits and are paid out to shareholders as a return on their investment. Retained earnings are the portion of net income that is kept by the company and used for future investments, debt repayment, or other business expenses. Therefore, choice B is the best answer as it correctly identifies the two options for using net income.

The Net Income That Firm Earns Can Either Be Paid