The increase in owners' equity for a given period is equal to
A) positive net cash flow minus dividends.
B) net income minus dividends.
C) sales minus dividends.
D) gross profit minus distributions to shareholders.

Question

Quizplus · Accepted Answer

Owners' equity represents the residual interest in the assets of an entity after deducting liabilities. The increase in owners' equity can be attributed to various factors such as net income or positive net cash flow. However, dividends are paid to shareholders which reduce the amount of money available to reinvest in the business. Therefore, the increase in owners' equity is equal to net income minus dividends.

The Increase in Owners' Equity for a Given Period Is