QUESTION 13 Which of the following statements is correct? Dividends that a company pays to its shareholders are a tax deductible expense and lower the company's taxes. Interest that a company pays on its debt is not a tax deductible expense. If a company pays more in dividends than it generates in net income, its retained earnings as reported on the balance sheet will decline from the prior year's balance All companies are required by law to make dividend payments to their shareholders. Dividends paid reduce the net income that is reported on a company's income statement