In its most recent financial year, Gold Coast Events earned $120,000 profit. Its assets increased by $170,000 and its liabilities increased by $70,000. What was the value of the owners' capital contribution or dividend paid during the year?

Question

Quizplus · Accepted Answer

The change in equity is calculated as the profit minus any dividends paid or plus any contributions made. Here, the equity increased by $100,000 ($170,000 increase in assets minus $70,000 increase in liabilities). Since the profit was $120,000, this means $20,000 must have been paid out as dividends to achieve the $100,000 increase in equity.

In Its Most Recent Financial Year, Gold Coast Events Earned