During the year, Millstone Company earned $6,500 of cash revenue, paid cash dividends of $1,000 to owners and paid $4,000 for cash expenses. Liabilities were unchanged. Which of the following accurately describes the effect of these events on the elements of the company's financial statements?

Question

Quizplus · Accepted Answer

Change in equity = Revenue − Expenses − Dividends
Change in equity = $6,500 − $4,000 − $1,000 = $1,500
If there was no change in liabilities, the change in assets must also equal $1,500.

During the Year, Millstone Company Earned $6,500 of Cash Revenue