During the past year, Easy Supplies Ltd.'s assets decreased $33,000, its liabilities decreased $41,000, its share capital increased $5,000, and Easy recorded net profit of $12,000. What was the amount of dividends declared?

Question

Quizplus · Accepted Answer

We can use the formula: 
Net income = Increase in equity = Increase in share capital - Dividends 
$12,000 = $5,000 - Dividends 
Dividends = $5,000 - $12,000 = -$7,000 
Since declaring negative dividends does not make sense, we can conclude that no dividends were declared. Therefore, the answer is B, $9,000.

During the Past Year, Easy Supplies Ltd