The income statement for August indicates net income of $50,000. The corporation also paid $10,000 in dividends during the same period. If there was no beginning balance in stockholders' equity, what is the ending balance in stockholders' equity?
A) $40,000
B) $50,000
C) $10,000
D) $60,000

Question

Quizplus · Accepted Answer

The ending balance in stockholders' equity is calculated by adding net income to the beginning balance and then subtracting dividends. Since the beginning balance is $0, the calculation is $50,000 (net income) - $10,000 (dividends) = $40,000.

The Income Statement for August Indicates Net Income of $50,000