If the opening balance of equity is $45,000, the closing balance is $60,000 and profit is $27,000, calculate the amount of dividends paid (assume all dividends declared have been paid)which will appear as a financing outflow in the statement of cash flows.

Question

Quizplus · Accepted Answer

The amount of dividends paid can be calculated by adjusting the opening equity with the profit earned and comparing it to the closing equity. The calculation is as follows: Opening Equity + Profit - Dividends = Closing Equity. Rearranging to find Dividends gives: Dividends = Opening Equity + Profit - Closing Equity = $45,000 + $27,000 - $60,000 = $12,000.

If the Opening Balance of Equity Is $45,000, the Closing