Asked by Laura Cinnamon on Jun 11, 2024
Verified
Which of the following will increase equity?
A) An increase in dividends paid
B) Issuance of new stock
C) An increase in retained earnings from net income
D) Both b & c
E) All of the above
Equity
Equity refers to the ownership interest in a company of its shareholders, representing the residual assets of the company after deducting liabilities.
Dividends Paid
The portion of a company's earnings that is distributed to shareholders.
Retained Earnings
The portion of net income not distributed as dividends to shareholders but reinvested in the company or kept as reserve.
- Recognize and categorize elements within the balance sheet, specifically focusing on current liabilities, assets, and equity.
- Comprehend the process of calculating dividends and retained earnings, along with their connection to net income.
Verified Answer
RP
Roberto ParedesJun 13, 2024
Final Answer :
D
Explanation :
Issuance of new stock and an increase in retained earnings from net income both increase equity. An increase in dividends paid decreases equity as dividends are paid out of retained earnings.
Learning Objectives
- Recognize and categorize elements within the balance sheet, specifically focusing on current liabilities, assets, and equity.
- Comprehend the process of calculating dividends and retained earnings, along with their connection to net income.
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