Which of the following statements about shareholders' equity is NOT true?
A) Shareholders' equity is the excess of assets over liabilities.
B) Shareholders' equity consists of two main elements: share capital and retained profits.
C) Shareholders' equity is a residual claim of the shareholders on the assets of the organisation.
D) Shareholders' equity is the amount shareholders will receive in dividends in the future.

Question

Quizplus · Accepted Answer

Shareholders' equity represents the residual claim of the shareholders on the assets of the organization after deducting liabilities. It consists of share capital and retained earnings. Shareholders' equity does not necessarily represent the amount shareholders will receive in dividends in the future. Dividends are decided by the board of directors and are usually paid out of retained earnings, which is a component of shareholders' equity. Therefore, statement D is not true.

Which of the Following Statements About Shareholders' Equity Is NOT