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ACCA Knowledge Level Changes in Equity — practice questions

Explore 1 free Changes in Equity questions in ACCA Knowledge Level Financial Accounting. Open each question or exercise to read its content, reference answers and available explanation.

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Changes in Equity questions and exercises with answers

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Which of the following will cause total equity to increase?Read the answer and worked solution →

Worked practice questions

Which of the following will cause total equity to increase?

  1. Paying a cash dividend to shareholders
  2. A net loss for the period
  3. Closing expense accounts into Retained Earnings
  4. Additional share investments by owners
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Correct answer: D. Additional share investments by owners

1. Equity increases from additional share investments or from net income. 2. Additional share investments raise Share Capital, increasing total equity. 3. Dividends (A) and a net loss (B) decrease equity. 4. Closing expenses into Retained Earnings (D) reduces it. 5. Therefore additional share investments increase equity. _Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §1.8 "Changes in Stockholders' Equity", p.47_

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