Net Income and Dividends

The income statement of a corporation for the month of February indicates a net income of $32,000.

During the same period, $40,000 in cash dividends were paid, which of the following statements is true?

a.The business incurred a net loss of $8,000 during the month.

b.Retained earnings has decreased by $8,000.

c.Liabilities have increased by $8,000.

d.The accounting equation is not balanced for the period.