1. In its annual report to shareholders, Belle Company reported that its shareho

Question

1. In its annual report to shareholders, Belle Company reported that its shareholders’ equity decreased from $58 million as of the beginning of the year to $28 million at year-end. Which of the following is a likely cause of this change in shareholders’ equity?

A. The company’s assets increased during the year.

B. The company had an operating loss during the year.

C. The company distributed less dividends than it earned in profit during the year.

D. The company’s liabilities decreased during the year.

Explanation / Answer

Answer is B.

B. The company had an operatin loss during the year.

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