2. Financial Statements

Changes In Equity — Quiz

Test your understanding of changes in equity with 5 practice questions.

Practice Questions

Question 1

A company has the following equity balances at the start of the year: Share Capital: $\$500,000$, Share Premium: $\$150,000$, Retained Earnings: $\$300,000$, and Revaluation Surplus: $\$100,000$. During the year, the company reports a net profit of $\$80,000$, declares dividends of $\$40,000$, and transfers $\$20,000 from Retained Earnings to a General Reserve. Additionally, the company records an upward revaluation of property by $\$50,000. What is the closing balance of the Retained Earnings account?

Question 2

A company issues 30,000 new shares at $\$12 per share. The nominal (par) value of each share is $\$4. How much will be recorded in the Share Premium account as a result of this share issue?

Question 3

A company’s Statement of Changes in Equity shows an opening balance of Share Capital of $\$250,000$ and Share Premium of $\$100,000$. During the year, the company issues new shares with a total nominal (par) value of $\$50,000$ and a share premium of $\$30,000$. What is the closing balance of the total Share Capital and Share Premium combined?

Question 4

During the year, a company reports a net profit of $\$100,000$, declares dividends of $\$25,000$, and transfers $\$15,000 from Retained Earnings to a General Reserve. If the opening balance of Retained Earnings was $\$180,000, what is the closing balance of the Retained Earnings account?

Question 5

A company issues 40,000 new shares at $\$9 per share. The nominal (par) value of each share is $\$3. How much will be recorded in the Share Capital account as a result of this share issue?