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SEC
Equity
Equity
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1/15

Which of the following is a formula to calculate equity?

Total current assets less total current liabilities

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Total non-current assets less total non-current liabilities

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Total assets less total liabilities

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Total assets less total current liabilities

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2/15

The resources that a sole proprietor contributes to a business are known as ______________

assets

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capital

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drawings

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profits

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3/15

The business assets that a sole proprietor withdraws from his business are known as ______________

assets

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drawings

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capital

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loss for the period

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4/15

The accounting theory that supports the recording of withdrawal of business’ assets for the owner’s personal use is __________________

accounting period theory

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consistency theory

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going concern theory

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accounting entity theory

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5/15

Which of the following is not an equity item in a sole proprietorship?

assets

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drawings

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capital

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losses

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6/15

What is the formula to calculate ending capital for a sole proprietor?

Beginning capital + Additional capital + Profit + Drawings

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Beginning capital + Additional capital + Profit - Drawings

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Beginning capital - Additional capital - Profit + Drawings

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Beginning capital - Additional capital - Profit - Drawings

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7/15

State the journal entry when dividends are declared.

Dr Dividends

Cr Dividends payable

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Dr Dividends

Cr Retained earnings

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Dr Dividends payable

Cr Retained earnings

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Dr Retained earnings

Cr Dividends

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8/15

At the end of the financial year in the accounts for a company, the profit for the period is transferred to the ______________ account.

Issued share capital

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Dividend

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Dividend payable

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Retained earnings

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9/15

A company has 500,000 ordinary shares. A dividend of $0.06 per share was declared. Calculate the total dividend amount distributed by the company.

$6,000

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$30,000

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$500,000

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$3,000,000

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10/15

The balance in the retained earnings account of Ace Limited on 1 January 2021 was $61,780. The profit for the year ended 31 December 2021 was $13,240, and dividends declared and paid was $4,320. Calculate the balance in the retained earnings account on 31 December 2021.

$44,220

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$70,700

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$75,020

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$79,340

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11/15

The equity section of a sole proprietorship consists of capital and drawings.
True 
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False
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12/15

The sole proprietor enjoys limited liability
True
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False
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13/15

The unit of ownership for a limited company is called a share.
True
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False
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14/15

The owner of a sole proprietorship enjoys all profits earned by the business. 
True
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False
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15/15

Shareholders of a private limited company enjoy all profits earned by the business.
True
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False
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