Answer:
1. Equity is the difference between the company's assets and liabilities.
2. D. $83
Explanation:
Req. A
We know,
The accounting equation is
Total asset = total liabilities + total stockholders' equity
Therefore, total asset - total liabilities = total stockholders' equity
So, we can say that equity is the difference between the company's assets and liabilities. However, equity cannot be claimed before the liabilities. Therefore, the option "A" is the correct answer.
Req. B
Now Inc.
Statement of retained earnings
For the year ended, December 31, 20XX
Beginning retained earnings (Last year) $527
Add: Net Income (Current year) 176
Less: Dividend (Balancing) <u> </u><u>(83)</u>
Ending retained earning (Current year) $620
Calculation: $(527 + 176 - 620) = $83
Therefore, the option "D" is the correct answer.
