Browning, Inc. had revenues of $234,000, expenses of $175,000, and dividends of $30,000 during 2012. Which of the following statements is correct?

Question

Quizplus · Accepted Answer

Net income is calculated as revenues minus expenses. Therefore, net income for 2012 is $234,000 - $175,000 = $59,000. Dividends are not included in the net income calculation. Therefore, total retained earnings decreased by $30,000 ($59,000 net income minus $30,000 dividends).