Which transaction is recorded in the statement of changes in equity?
Correct answer: C. Declaration of a dividend to owners
- A. Payment of a supplier's invoice
- B. Recognition of depreciation expense
- C. Declaration of a dividend to owners
- D. Purchase of inventory on credit
Explanation
A dividend distribution reduces retained earnings and is shown as a movement in equity. The other transactions affect assets, liabilities, or profit but are not direct distributions to owners.
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About Financial Statements
Financial statements present a business's financial performance and position through the income statement, statement of financial position, cash flow statement and changes in equity. Questions involve preparing and interpreting these statements, adjusting entries, depreciation, closing inventory, accrued and prepaid items, and distinguishing profit from cash flow.
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