CAsh Flow Stmt practice prob from curriculum

Practice prob 15 asks to calculate ccoin the answer it includes dividend paid to retained earnings to get NI and then adds or subtracts the items of bS

i didn’t understand how dividend paid which is a CFF item be added in arriving CFo

please help!

Your question is not clear

I did not understand how net income includes RE and dividend paid,

I have no idea what you just asked… but,

after you have Net Income, that Net Income goes to one of two places… either Retained Earnings or Dividends. So, all you do is subtract dividends from Net Income and the rest goes into R/E.

Still have no idea if that was even close to the question you asked.

My question is simple the curriculum calculates NI as an addition of dividend paid (10) and RE (25) to get NI as 35. Why is that so? Why is dividend paid added in NI that’s my question

I just explained that above.

Going down your income statement on the bottom-line you have Net Income. After net income, you can either pay out dividends or they go into retained earnings. If you pay out dividends, whatever you have left goes into Retained Earnings.

Retained Earnings = Net Income - Dividends

So: Net Income = Retained Earnings + Dividends


I should’ve read carefully, was simple