Equity is increased when net income exceeds dividend distributions.

Name: Equity is increased when net income exceeds dividend distributions.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Equity represents the owner's residual interest in the assets of the company after liabilities are deducted. Net income adds value to the company and increases the equity, while dividends distributions reduce the equity. Therefore, if net income exceeds dividend distributions, equity will increase.

Equity Is Increased When Net Income Exceeds Dividend Distributions