Question

Last year the Digby company increased their equity. In 2019 their equity was $49,136. Last year...

Last year the Digby company increased their equity. In 2019 their equity was $49,136. Last year (2020) it increased to $52,451. What are causes of change in equity? Check all that apply.

Select: 3 An accounts payable change of$999. A change in short term debt of-$4,473. Depreciation of -$41,287 A change of plant and equipment of$9,580. Profits of $11,419 Issue and retirement of stock . A bond issue of$1,378. Change in inventory of-$4,227. A change in cash of -$19. Plant Improvements of $9,580 Dividend payment of$6,494.

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Answer #1

Answer

  • Profits of $11,419
  • Issue and retirement of stock
  • Dividend payment of$6,494.

Explanation:

Equity refers to shareholders' funds. Equity includes the following:

  1. Share capital
  2. Reserves and Surplus

Change in Equity had the following reasons:

  • Profits of $11,419 - as profits are part of Reserves and Surplus
  • Issue and retirement of stock as stock is a part of share capital
  • Dividend payment of $6,494 as dividends will reduce Reserves and Surplus.

In case of any doubt or clarification, you're welcome to come back via comments.

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