Which one of the following statements is correct concerning a statement of comprehensive income?
A) Interest expense decreases the taxes owed by a ﬁrm.
B) Net income is either paid out as dividends or added to the retained earnings of the ﬁrm.
C) Depreciation increases the net income of a ﬁrm.
D) Net income is equivalent to the operating cash ﬂow of a ﬁrm.
E) Taxes will increase the amount of a loss incurred by a ﬁrm with negative taxable income.

Question

Quizplus · Accepted Answer

Net income is the total profit earned by a firm after all expenses, including interest and taxes, have been subtracted from the revenues. This net income can either be paid out to shareholders in the form of dividends or retained by the firm to reinvest in the business, which increases its retained earnings. Therefore, option B is the correct statement concerning a statement of comprehensive income.

Which One of the Following Statements Is Correct Concerning a Statement